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Ford Motor (F) CEO Jim Farley said the automakers’ messy fourth quarter was a function of its transition to a new business structure that limited production capacity, combined with poor execution. But we remain disappointed in the results and need to see an increase in profitability to stick with the stock after the next quarter. In an interview with CNBC that aired Friday, Farley said he’s in the midst of restructuring Ford to do business more efficiently but has faced challenges in simplifying processes at the auto giant, which in turn held back its profit last quarter. “It’s a lot to change. We have a lot of complexity relative to the customer and inside our company. It takes time to work through that,” Farley said. Ford late Thursday reported adjusted earnings-per-share (EPS) well below analysts’ forecasts, overshadowing a revenue beat. The company’s full-year EPS guidance also came in weaker than expected , sending the stock tumbling Friday. Shares closed down more than 7.5% in afternoon trading, at $13.23 apiece. The earnings miss comes days after Ford said it was cutting prices of its electric Mustang Mach-E crossover , while raising production, weeks after EV industry leader Tesla (TSLA) made a similar move. The price cuts mean that not all Mach-E models will be profitable on a per-unit basis. Last year, Ford announced a split of its electric vehicle (EV) and internal combustion engine vehicles into separate business units, called Ford Model e and Ford Blue, respectively. But profitability has yet to catch up with the restructuring. Farley told CNBC the automaker needs to work through higher-than-expected costs, a shortage of semiconductor chips and supply chain snags to achieve better profits at its EV division. “It takes a simplified effort to get to that 8% margin we’re looking for,” he said. However, he added, management still needs to rethink how to produce and distribute EVs in a more cost-effective way. The Club take “It’s inexcusable that Ford had a bad quarter,” Jim Cramer said Friday. “We will boot the stock if this quarter isn’t good,” he added. It’s positive that Farley has acknowledged the need for greater supply-chain efficiency, increased production, an improved cost structure and better execution — but we need to see the results. We’re sticking with Ford for now but it’s in the penalty box, meaning management has one more quarter to get it right. If we don’t see improvement by the next quarterly report, we will have no choice but to move on. (Jim Cramer’s Charitable Trust is long F. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Ford CEO Jim Farley at the company’s Dearborn, Michigan, plant where it’s building the electric F-150 Lightning on April 26, 2022.
CNBC | Michael Wayland

Ford Motor (F) CEO Jim Farley said the automakers’ messy fourth quarter was a function of its transition to a new business structure that limited production capacity, combined with poor execution. But we remain disappointed in the results and need to see an increase in profitability to stick with the stock after the next quarter. More

Smart Tax Planning

While the odds of an audit have been low, the IRS may flag your return for several reasons, tax experts say.
Some of the common audit red flags are excessive deductions or credits, unreported income, rounded numbers and more.
However, the best protection is thorough records, including receipts and documentation.

dmphoto | E+ | Getty Images

Tax season is underway, and there’s been increased scrutiny of the IRS as it starts deploying part of the nearly $80 billion in funding approved for the agency by Congress in August. 
While Treasury Secretary Janet Yellen has said goals include boosting customer service and improving technology, critics have warned the new funding will spark an uptick in IRS audits. 

“People are scared to death of the IRS,” said Karla Dennis, an enrolled agent and founder of Karla Dennis and Associates. “They don’t understand how the system works, and so they’re extremely fearful of audits.” 

More from Smart Tax Planning:

Here’s a look at more tax-planning news.

The IRS audited 3.8 out of every 1,000 returns, or 0.38%, during the fiscal year 2022, down from 0.41% in 2021, according to a recent report from Syracuse University’s Transactional Records Access Clearinghouse.
While IRS audits have been rare, experts say certain moves are more likely to trigger an exam.

4 red flags for an IRS audit

The statute of limitations for an IRS audit is typically three years, with the clock starting once you file, explained John Apisa, a CPA and partner at PKF O’Connor Davies LLP. But there’s no time limit when the agency is pursuing tax fraud. 
Generally, the agency uses software to compare each return to others with similar income, assigning a numeric score to each one, with higher numbers more likely to trigger an audit.

Some of the red flags that may trigger an audit include:
1. Excessive credits or deductions compared to income 
For example, your return may get flagged if you made $100,000 and claimed $70,000 in charitable deductions.
2. Missing income
Your return must reflect what’s been reported by employers and financial institutions, Apisa said, such as Form 1099-NEC for contract work or Form 1099-B for investment earnings. Wait to file until you have all your documentation in hand, and check to make sure what you entered matches what’s on the forms.
“You have to be careful, even with the simpler stuff,” he said. 

3. Refundable credits
The IRS also reviews refundable tax credits more carefully since filers can still receive the tax credit with zero balance due.
While audits have declined overall, the drop is lower for filers claiming the earned income tax credit, a tax break for low to moderate earners, which has contributed to higher audit rates among Black Americans.
4. Round numbers
Deductions with rounded expenses may raise eyebrows, said Preeti Shah, a certified financial planner and CPA at Enlight Financial in Hamilton, New Jersey.
For example, if a business owner lists exactly $5,000 for advertising, $3,000 for legal expenses and $2,000 for support, “the IRS knows you’re just winging it,” she said.   
“Round numbers are a dead giveaway,” Apisa added.

How to protect yourself from a possible audit

While taxpayers may be fearful of an audit, experts say the best protection is staying organized by saving receipts and records to show proof, if needed. “You’re guilty until proven innocent,” Shah said.
And if you’re missing a receipt, copious records may provide a narrative to back up your position, Dennis said. “Document, document, document,” she added.  More

Southwest’s COO will face questions from senators next week over the airline’s holiday meltdown.
The carrier canceled more than 16,700 flights during the last 10 days of December.
The debacle has drawn scrutiny from lawmakers and the Biden administration.

John and Lori Ingoldsby, who drove to Denver after the first leg of their flight on Southwest Airlines was canceled, wait for a flight to finish their trip at Denver International Airport on December 28, 2022 in Denver, Colorado.
Michael Ciaglo | Getty Images

Southwest Airlines’ chief operating officer, Andrew Watterson, will face questions from a Senate panel next Thursday about the carrier’s holiday meltdown that stranded hundreds of thousands of travelers.
Southwest said the hearing date overlapped with “a previous commitment” for CEO Bob Jordan.

Jordan, who has been CEO for a year, has vowed to win back travelers’ trust after the debacle, which led to an $800 million pretax hit last quarter and pushed it into a loss.
Watterson plans to “use the opportunity to explain how we’ve taken actions to make things right for our Customers since Southwest’s late December disruption, as well as what we’re doing to mitigate the risk of it happening again,” the airline said in a statement.
The incident has drawn increased scrutiny from Washington and capped a year of on-and-off disruptions in air travel, due to bad weather, staffing and technology issues.
Southwest canceled more than 16,700 flights between Dec. 21 and Dec. 31 as crew scheduling software was unable to keep up with numerous flight changes in the wake severe winter weather.
The Senate Commerce Committee hearing will also include testimony from Casey Murray, president of the Southwest pilots’ labor union; Sharon Pinkerton, senior vice president of legislative and regulatory policy at Airlines for America, an industry group that represents the country’s largest airlines; Paul Hudson, president of consumer rights group Flyers’ Rights; and Clifford Winston, a senior fellow at the Brookings Institution.
Sen. Maria Cantwell, D-Wash., the committee chair, had previously said she planned to hold a hearing on flight disruptions after Southwest’s holiday travel chaos.

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The U.S. Treasury is changing its definition of an “SUV” to make more electric vehicles from Tesla, General Motors and others eligible for up to $7,500 in federal tax credits at higher prices.
The decision follows Tesla CEO Elon Musk publicly criticizing the former standards as well as GM and Ford lobbying to change the guidelines.
It’s unclear how the decision will affect up to 20% pricing cuts announced by Tesla last month that made the Model Y eligible for the credits.

A Tesla Model Y on display inside a Tesla store at the Westfield Culver City shopping mall in Culver City, California, U.S., on Thursday, April 14, 2022.
Bing Guan | Bloomberg | Getty Images

DETROIT – The U.S. Treasury said Friday it is changing its definition of an “SUV” to make more electric vehicles from Tesla, General Motors and other automakers eligible for up to $7,500 in federal tax credits at higher prices.
The decision follows Tesla CEO Elon Musk publicly criticizing the former standards on Twitter as well as automakers such as GM and Ford Motor lobbying to change the guidelines ahead of final rules being announced next month.

The change raises the retail price cap to $80,000 from $55,000 for vehicles such as the Tesla Model Y, Cadillac Lyriq, Ford Mustang Mach-E and Volkswagen’s ID.4. Previously some or all models of these vehicles did not qualify because they didn’t weigh enough to be considered an SUV by the Treasury’s standards.
The credits are part of the Biden administration’s $437 billion Inflation Reduction Act, which was approved in August. Under the bill, SUVs can be priced at up to $80,000 to qualify for EV tax credits, while cars, sedans and wagons have to be priced at or under $55,000.

Comparison of Ford, GM and Tesla shares.

It’s unclear how the decision will impact up to 20% pricing cuts announced by Tesla last month that made the Model Y eligible for the credits. Tesla did not immediately respond for comment.
Wall Street applauded Tesla’s price reductions but also was concerned that they would start an EV pricing war and pressure margins of other automakers, despite rising commodity costs for the vehicles. Tesla has enjoyed significantly higher profit margin on its EVs compared with traditional automakers.
Ford said Monday it would cut pricing of its Mustang Mach-E by up to $5,900 to better compete with Tesla’s Model Y. That’s despite the company’s overall EV business not currently being profitable, including some Mach-E models selling at a loss for the company.

Ford, in an emailed statement, said Friday officials “sincerely appreciate their consideration and hard work” by the Treasury.
GM also thanked the Treasury and hailed the changes: “The alignment on classification will provide the needed clarity to consumers and dealers, as well as regulators and manufacturers.”
The Alliance for Automotive Innovation, a lobbying group for most automakers operating in the U.S., also commended the decision.
– CNBC’s Chelsey Cox contributed to this article.

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United Parcel Service in April will start to negotiate a new national union contract, with the current one set to expire on July 31.
CEO Carol Tomé believes negotiations will conclude before the end of July.
“Whether there is a strike of UPS workers is up to UPS,” said a spokesperson for the Teamsters.

United Parcel Service (UPS) driver pushes a dolly of packages towards a delivery van on a street in New York.
Victor J. Blue | Bloomberg | Getty Images

With United Parcel Service’s labor negotiations approaching, CEO Carol Tomé sounded confident on this week’s fourth-quarter earnings call that a “win-win-win” agreement would be reached before the end of July.
But Tomé’s optimism comes as the Teamsters union, which represents more than 340,000 UPS workers, amps up pressure on the delivery giant.

“There have been a lot of articles and headlines that might cause someone to question whether or not a win-win-win is achievable,” Tomé said Tuesday on the call, acknowledging talk of tougher negotiations.
The Teamsters publicly pledged to launch a strike if a satisfactory contract is not reached. “Whether there is a strike of UPS workers is up to UPS,” said Kara Deniz, a spokesperson for the Teamsters.
The talks start in April, with the current national contract set to expire on July 31. Negotiations for local contracts begin this month.
A strike could do substantial damage to UPS operations, and create problems for businesses and consumers alike. In the fourth quarter of 2022, UPS workers delivered a global average of 28 million packages per day, according to the company’s website.
Even with the rumblings about a potential strike, Tomé is maintaining a positive outlook given that unionized workers “have been a part of the UPS family for more than 100 years.”

“This is not our first rodeo,” she said.
But this year’s talks will be different.
What to expect
Since UPS and the Teamsters last negotiated a contract in 2018, the world has been through a global pandemic that workers say has worsened UPS working conditions. The union itself has found new, more aggressive leadership, at that.
For the first time, Teamsters Union President Sean O’Brien and the union’s secretary of the treasury will have seats at the bargaining table and be directly involved in negotiating the terms of the new contract.
O’Brien took the helm of the union in March 2022 with an ambitious agenda and a radical attitude relative to his more moderate predecessor, James Hoffa.
“We are sending a message to UPS that the days of concessions and walking all over our members are over,” O’Brien said Aug. 1, when the union kicked off its national campaign in advance of negotiations.
The tough approach comes in the wake of the Covid pandemic e-commerce boom that fed a spike in UPS shipping volumes, generating high profits for the company and tougher working conditions for its employees, the union has said.
At the bargaining table, the Teamsters are looking to secure higher wages, more manageable work shifts and improved safety conditions. It wants to tone down employee surveillance practices like, for instance, getting rid of the ring cameras installed in most trucks.
Plus, after a slew of heatwaves, the Teamsters are calling for improved safety measures inside the company’s trademark brown trucks and warehouses. Over the summer, UPS drivers took to social media to post thermometer reads from inside their trucks, which often neared 120 degrees.
“There can be no dispute sadly that the earth is heating up and that puts an uncomfortable situation on our employees at the peaks of the summer,” Tomé said on the earnings call. She explained that even before negotiations begin, the company was planning to bring in new technology and hydration measures to keep workers safe in dangerous heat.

Teamsters also want to eliminate the “22.4” employee classification, which refers to workers who often work full-time hours but are officially considered hybrid and, as a result, are paid less. In general, the union is aiming to expand the number of full-time positions and put an end to subcontracting.
The union agenda also includes more manageable worker schedules after the Covid-era shipping spike forced many to have to work a sixth day on the weekend – what the union has coined “the sixth-day punch.”
“There are some drivers who leave while their kids are sleeping and when they come back at night, the child is back in bed. [Those drivers] lose the entire day working,” said Deniz, the Teamsters spokesperson.
The ‘bumpy year’ ahead
The pandemic shipping boom has since eased, and UPS is now navigating how to stay profitable while volumes sag.
CFO Brian Newman said he expects 2023 to be a “bumpy year,” as macroeconomic challenges like higher interest rates and inflation continue to drive up the company’s costs and weigh on demand. UPS estimates that 56% of its profit will come in during the second half of the year on the bet that loosening Covid restrictions in China will help revive the company’s international market.
Given these headwinds, UPS’ path forward looks centered around cutting costs and raising prices. The company said it would reel back capital expenditures to $5.3 billion, down from the initial $5.5 billion plan they started fiscal 2022 with, focusing on leasing rather than buying some of its locations. UPS also raised shipping rates by 6.9% in December 2022.
But as UPS tries to rein in costs, the question of higher wages and other labor investments still lingers.
“When you see something like [Tuesday’s earnings] where there were cloudy projections, well, what you also saw was $8.6 billion in dividends and buybacks,” said Deniz.
“Our members know what this company makes. They know the finances of this company and they know that they are what makes this company money,” Deniz added. “They want their share of the profitability.”
Despite the long list of union demands, Tomé assured analysts on the Tuesday earnings call that the company and the Teamsters are “aligned.”
“With just a few tweaks to our existing contract,” she said, “we can work this out.”

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A Starbucks store is seen inside the Tom Bradley terminal at LAX airport in Los Angeles, California.
Lucy Nicholson | Reuters

Check out the companies making headlines in premarket trading.
Alphabet — Shares declined more than 3% after Google-parent Alphabet missed analyst expectations in its latest earnings report. Alphabet earned $1.05 per share, lower than the expected earnings of $1.18 per share, according to consensus estimates from Refinitiv. It posted revenue of $76.05 billion, less than the forecasted $76.53 billion.

Apple — The tech giant saw its stock fall about 2% in premarket after the company missed expectations for revenue, profit, and sales for many of its lines of business. Apple’s overall sales for the holiday quarter fell 5% year over year, marking the company’s first top-line decline since 2019.
Amazon — Amazon dropped 4% after the e-commerce giant reported its fourth-quarter results. Although the company’s quarterly sales beat analysts’ estimates, current-quarter guidance came in somewhat light of expectations. The e-retailer estimates its first-quarter revenue to fall between $121 billion and $126 billion. Meanwhile, analysts were expecting sales to come in at $125.1 billion, according to Refinitiv.
Ford – Shares of Ford slipped 6.5% after the company reported earnings that badly missed Wall Street’s earnings expectations. The automaker reported adjusted earnings per share of 51 cents on $41.8 billion in revenue where analysts polled by Refinitiv expected adjusted earnings per share of 62 cents and $40.37 billion in revenue. The company also posted a net income that was down more than $1 billion on the year. 
Starbucks — The coffee giant’s shares slid 2.10% after the company’s earnings report fell short of expectations. Starbucks reported earnings per share of 75 cents compared to Refinitiv analysts’ projections of 77 cents. Revenue also fell short of the $8.78 billion Refinitiv estimates, coming in at only $8.71 billion. Weakened international demand, particularly in its second-largest market China, weighed on the results.
Qualcomm — The semiconductor group saw its stock drop almost 3% after its top line fell short during its fiscal first quarter. Qualcomm’s revenue fell 12% year over year during the quarter. The company cited macroeconomic conditions and higher channel inventory as headwinds to its results. The company’s stock has fallen 24% in the past year.

Nordstrom — Shares of Nordstrom rallied 27% after The Wall Street Journal reported that activist investor Ryan Cohen is building a sizeable stake in the retailer. The report, which cites people familiar with the matter, also said Cohen will push for changes to Nordstrom’s board following a sharp stock price drop.
Clorox — The cleaning products producer saw its shares rise 3.55% before the bell on the back of strong quarterly numbers. Clorox posted fiscal second quarter earnings of 98 cents per share, excluding items, on revenue of $1.72 billion. That compares to earnings of 65 cents per share on revenue of $1.66 billion estimated by analysts, according to Refinitiv.
— CNBC’s Fred Imbert, Carmen Reinicke, Sarah Min and Yun Li contributed reporting

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Nordstrom shares are zooming higher after a report said GameStop Chairman Ryan Cohen bought a stake in the department store chain.
The Wall Street Journal said Cohen is focusing on former Bed Bath & Beyond CEO Mark Tritton, who is a Nordstrom board member.
The news came weeks after Nordstrom reported lackluster holiday sales and cut its full-year guidance.

Shoppers exit Nordstrom at the King of Prussia Mall on December 11, 2022 in King of Prussia, Pennsylvania.
Mark Makela | Getty Images

Shares of Nordstrom surged Friday morning following news that activist investor and meme stock maven Ryan Cohen bought a stake in the high-end department store company.
The stock was up about 30% in premarket trading.

The Wall Street Journal, citing people familiar with the matter, reported Thursday evening that Cohen was in the process of acquiring a “sizable stake” in Nordstrom while looking to shake up its board. The Journal said Cohen is now one of Nordstrom’s top five nonfamily shareholders.
Nordstrom, for its part, said it was open to hearing Cohen out.
“While Mr. Cohen hasn’t sought any discussions with us in several years, we are open to hearing his views, as we do with all Nordstrom shareholders,” the company said in a statement. “We will continue to take actions that we believe are in the best interests of the company and our shareholders.”
The news about Cohen comes weeks after Nordstrom, which has had to dramatically mark down prices to ease an inventory glut, reported lackluster holiday sales and slashed its guidance for the year. The company is set to report earnings March 2.
Cohen, who founded pet retail and health site Chewy, is considered a champion of the meme stock crowd. He is the chairman of Reddit favorite GameStop. He also triggered a brief rally in Bed Bath & Beyond last year before he ultimately dumped out of the stock. Bed Bath is expected to file for bankruptcy protection any day now.

Cohen appears to be taking aim once again at Mark Tritton, the former Target executive who was forced out as Bed Bath CEO last year as Cohen’s firm pressured the struggling home goods retailer. Tritton has been on Nordstrom’s board for nearly three years, after having previously worked for the company from 2009 to 2016.
According to the Journal, Cohen thinks Tritton, because of his prior experience working at the company shouldn’t be deciding on compensation for Nordstrom family members who are also executives at the retailer. Erik Nordstrom is the company’s CEO, while Peter Nordstrom serves as its president.
–CNBC’s Kerry Caufield contributed to this report.

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CEO Jim Farley wants Ford to become a far more efficient company, and he needs it to happen quickly.
“We have to change our cost profile,” Farley told CNBC. “We know what we have to go after.”
The Detroit automaker missed analyst expectations by a wide margin due to another quarter in which costs and supply chain issues hurt the bottom line.

Ford CEO Jim Farley is frustrated.
The company’s fourth-quarter earnings on Thursday missed analyst expectations by a wide margin, as costs and supply chain issues again hurt Ford’s bottom line, Farley knows his company needs to change.

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“We have to change our cost profile,” Farley told CNBC after a call with analysts to discuss the quarter’s results. “We know what we have to go after. I’d love to give you all the metrics and all the specific gaps we see. But you know, whether it’s absenteeism, the number of sequencing centers, the number of wiring harnesses we have, we know what it is.” 
In short, Farley wants Ford to become a far more efficient company, and he needs it to happen quickly.
The push to transform Ford is taking on greater urgency after the automaker reported 2022 adjusted earnings of $10.4 billion, just three months after the company told analysts it expected to make $11.5 billion to $12.5 billion in that year. 
How did Ford fall more than a billion dollars shy of hitting a profit target it gave Wall Street at the end of October?  
Blame it on poor execution and higher-than-expected costs. Last quarter, Ford said, overcoming supply chain challenges, including a shortage of semiconductor chips, increased costs by $1 billion more than planned. Ford production was 100,000 vehicles shy of what the automaker expected to build.

Ford workers produce the electric F-150 Lightning pickup on Dec. 13, 2022, at the automaker’s Ford Rouge Electric Vehicle Center.
Michael Wayland | CNBC

Supply chain and cost issues hurt Ford over the last two years. Last September, Ford warned third-quarter costs would be $1 billion greater than expected. For the last two years, high warranty costs — from recalls and troubled launches of new vehicles — were a problem that Farley and his team have been unable to fix.
Farley said Ford’s complexity is part of the problem.
“We have a lot of complexity relative to the customer and also inside our company. And we can cut the customer-facing complexity like we have, but it takes time to work that down to parts on the line, to the manufacturing line,” he said. “It just takes time to work through that and that’s what we’ll do.”
While discussing the fourth-quarter results with Wall Street analysts, Ford’s leadership declined to detail the specific steps it will take to cut costs and make the automaker more efficient and profitable.  
Farley said the answer is not simply cutting jobs, which has historically been the way automakers have cut costs. “There are things we could do in the short term, but I don’t want to just make the output the cuts without redesigning the work. This has to be sustainable and that’s how we’re thinking about it nowadays,” he said.
Will this new push to cut costs hurt Ford’s growth in production and sales of electric vehicles? Farley said no. 
In fact, he said he believes separating the EV and internal combustion engine vehicle operations into two distinct divisions will actually accelerate efforts to drive greater efficiency. To prove his point, Farley says Ford’s second generation of EVs will be radically simplified, which should eventually lead to fewer problems and higher margins. 
“I can’t wait to show you and the whole world this next cycle of products,” he said. “Many of our competitors are just coming out with their first cycle and we can see their batteries are too big. Their distribution costs are too expensive. They’re spending too much money on advertising. You know, we can’t do that. We don’t plan on doing that.”

A Ford Mustang Mach-E GT at the 2022 New York International Auto Show in New York in April that year.
Jeenah Moon | Bloomberg | Getty Images

When Farley became CEO of Ford in October 2020, he vowed to quickly drive the automaker into a new leg of growth led by electric models like the Mustang Mach-E, the E-Transit commercial van and the F-150 Lightning. 
And in many ways, he has succeeded. Ford is No. 2 in EV sales in the United States, with just under 8% market share. 
While it’s not close to catching up with Tesla, which sells two out of every three EVs in the U.S., Ford’s EV production is increasing rapidly. At the end of last year, Ford was building 12,000 EVs a month. By the end of 2023, Ford expects EV production will reach 50,000 a month. 
Still, for all of its accomplishments transitioning to EVs, Ford continues to face issues with internal combustion engine vehicles, which are responsible for almost all of Ford’s profits.
Farley knows investors are watching and waiting for Ford to finally get its act together.
“Be patient. You know, we got the right team. We got the right plan. We’re growing like heck in our pro and EV business,” Farley said when asked what he would say to Ford shareholders. “This key team is going to deliver for you and you are going to get a great return on your investment.”
— CNBC’s Meghan Reeder contributed to this report.

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