Marc Lautenbach: Hold on a second, if you will. If you look at our revenue per piece for last year in our domestic business, it was up double-digit. So, I know there’s always a fear that you chase lower margin stuff, but if you look at our revenue per piece last year, it was up 12% to 15%. So that gives you a fair amount of assurance that the team is focused on bringing in the right mix at the right price.
Anthony Lebiedzinksi: Okay. Thanks for that explanation. And then as far as the unallocated, the corporate expenses, those came in higher than expected? I know, Ana, you talked about the incentive comp or timing of that impacting, going forward, how should we expect unallocated corporate expenses to flow through for the year?
Ana Chadwick: Yes. So, what we’re expecting is, as a company for performance, we expect to replenish or relevelize some of our incentive compensation as we move into 2023. And we are continuing as I mentioned last quarter to have a very strict cost program. So, the net of those two you should see pull through.
Anthony Lebiedzinksi: Okay. Thanks. And then lastly, as far as the 2023 guidance, can you give us a sense as to how should we think about the different segments? And as far as quarterly progress, given what’s going on with the economy, do you expect things to be softer in the first half versus the back half or I don’t want to put words in your mouth, but how should we think about the quarterly progression, if you could give us any color as far as the revenue outlook for the year that would be very helpful? Thank you. Sure.
Ana Chadwick: Sure. As I mentioned, I think the biggest driver here will be the growth in Global Ecommerce, especially around our Domestic Parcel and we anticipate that to be more back-end loaded in the year, probably more fourth quarter than everything. So, I would anticipate our profile as a company to follow that as well.
Marc Lautenbach : I also think, the entire €“ a really important point, which I know you guys get. You know the seasonality of Global Ecommerce is heavily skewed to the fourth quarter and you can see it across the entire market. So, as I think about it, you’ve got SendTech and Presort that are pretty consistent throughout the year. You have GEC that is entering a more seasonal business, and it’s also true as we bring on more customers that will also be realized in the back half of the year. So, it’s a different, kind of skew than we’re used to seeing, I think the market is seeing, but it’s consistent with the overall dynamics within the industry.
Anthony Lebiedzinksi: All right. Well, thank you and best of luck.
Operator: Next, we’ll go to the line of Peter Sakon from CreditSights. Please go ahead.
Peter Sakon: Good morning. Following up on the weight of the parcels, you talked about targeting a higher weight package, can you talk about what the average is now and the strategy to gain with additional higher weight volume?
Marc Lautenbach: Average is about 2.5 pounds, I mean, between 2.4 pounds and 2.5 pounds. In the last couple of weeks of the quarter, it went closer to 2 pounds. I mean, so that was kind of the variance that we saw. We like that 2.5, I mean, you know, as I said, even at 2 pounds it’s got a positive contribution margin to the overall business. So, it’s not that we don’t like those business. It’s just we’ve got to ensure that we get the right absolute number of higher weight parcels. So, we don’t think about this as mix. We think about this, you know if we’re targeting 200 plus million parcels within that, we need the right absolute percent of heavyweight €“ right absolute number of heavyweight parcels.
Peter Sakon: Can you talk about how you’ll achieve this? Like what are the strategies that were important to improve this?
Marc Lautenbach: So, as I said, within our backlog, the mix is €“ there’s plenty of heavier weight parcels there. So, we’ll have a higher degree of focus on those parcels. I would also say if you look at the mid-market in general, which is kind of where our principal hunting ground is, the mid-market within retail and marketplaces tends to have more higher weight parcels. So, I mean our in, kind of our go to market model is already skewed towards heavier with stuff. And I would say our compensation system is as well. So, we pay sensitive to profit, which is largely €“ although exclusively driven by weight and price.
Peter Sakon: Okay. What do is the capacity utilization of your network currently? And what’s the target here over 2023?
Marc Lautenbach: So, right now, our exit rate of the year, which we said in the fall of the year was between 195 million to 200 million parcels. I would say, we’re kind of on the north end of that. So, a little bit above 200 million parcels. Think about a network that’s got capacity for 300 million parcels. Our objective this year for that business is probably to be north of 220 million to 230 million parcels. So, that’s kind of the basic math that we’re looking at. So think of a market that’s 70% or 75%.
Peter Sakon: Okay. And on capital allocation, can we talk about CapEx and the mix by segment for 2023 in a quarterly €“ I see a disclosure roughly 40% for Global Ecommerce in 2022? And so, what’s the sort of your expectation for each segment for 2023?
Ana Chadwick: Yes. The expectation would be €“ we’ll be down, as I mentioned, on a year-over-year basis. And the expectation would be that we will have a little bit of a higher decline in globally commerce, so global ecommerce will be around still of the total. The interesting thing here to point out is that as we mentioned in 2022, we will continue to spend on optimization of the network rather than that expansion of capacity. We feel good with the capacity as Marc just noted. And the other segments will keep roughly similar proportions than what they’ve had in the past.
Marc Lautenbach: So, CapEx, I want to make two additional points. Put that CapEx number in context, two years ago, I believe we spent $190 million on CapEx or $185 million, I mean somewhere in that range on CapEx. That was largely around the build-out of the network to accommodate those 300 million parcels. So, the is kind of in that context. The other point that I would say, if you look at the capital consumption of GEC, it is, as Ana said, down dramatically. We’re still targeting for EBITDA minus CapEx and working to have a plan that number is positive. I’ve said, I’ve become a little more cautious about that dynamic in 2023 given the macroeconomic environment, but that’s still what the team is reaching for.
Peter Sakon: And just following up on ecommerce EBITDA, what €“ like how much of EBITDA on the domestic business versus the international business? And are those business €“ I’m guessing international is struggling more or they seem to be. Could you separate that or exit international? It doesn’t turn EBITDA positive in 2023?
Ana Chadwick: Yes. So the way €“ the easiest way to think about it is from a gross margin perspective. And I want to point out what we mentioned is the dynamics are changing and as we move into 2023, Domestic Parcel will become even a greater proportion of that gross margin. As I mentioned, 650 basis improvement and an additional at least 400 basis points more as we go into 2023. So, we anticipate that more and more of our profitability will come from that domestic parcel. And 75% of revenues are already in that domestic parcel. So, it gives you a sense of the proportionality.
Peter Sakon: This is my last question. But just to €“ I guess you could argue that just because something is a greater proportion doesn’t necessarily mean or maybe if international is smaller, doesn’t necessarily mean it’s good, if you will or maybe if I could say differently, if it’s still negative, is it worth keeping despite being a smaller proportion?
Marc Lautenbach: That is the question specific to GEC?
