Jasper Bibb: Got it. Last question from me. The company really stepped up the repurchase this quarter. How should we think about the pace of capital deployment into 2024?
Scott Salmirs: Yeah, no, thanks for the question, Jasper. I would say that we’re really pleased that we were able to return capital back to our shareholders over Q4, especially in light of the compression in our share price that we saw after our Q3. And as we look to the future, within FY ’24 at a minimum, we’ll buy back shares against the dilutive share-based compensation. We have a Board authorization now for about $210 million worth of shares and so we’ll be opportunistic where it makes sense.
Jasper Bibb: Makes sense. Thanks for taking the questions guys.
Scott Salmirs: Thanks.
Operator: Thank you. Our next questions come from the line of Faiza Alwy with Deutsche Bank. Please proceed with your questions.
Faiza Alwy: Yes, hi, good morning. So I wanted to ask about Technical Solutions. I know you don’t guide to revenues, but it sounds like the range of alternatives or the range of scenarios on Technical Solutions is quite wide, just given timing. So give us a bit more color on how do you expect the pacing of these new projects, project revenues to be realized and how do you expect sort of the underlying business to perform within Technical Solutions?
Scott Salmirs: That’s great. Thanks for the question. So, look, we feel as strongly about Technical Solutions as we ever have. We love kind of the end markets that we’re serving here and we think it’s going to be a strong year for Technical Solutions in ’24. They continually post high single-digit margins. We’re expecting that again. And remember Faiza, the cadence of Technical Solutions, it starts off a little soft and then progresses through the year from a margin standpoint, because it is quite seasonal. In the summer you do a lot of the work, right? So we’re excited about that. We don’t guide to revenue, but we’re excited about the potential for growth this year. And we have the strongest backlog that we’ve ever had. And just as a reminder, backlogs are the contracts that are signed and locked, and it’s just a question of starting the work. So we’re feeling really good about technical solutions this year.
Faiza Alwy: Maybe just to follow up on that, now that you’ve ended fiscal ’23, could you give us a bit of a breakdown? Because I know there’s a bunch of different items underneath Technical Solutions. There’s the bundled energy, there’s other things, there’s the EV charging segment. Can you give us just a breakdown of the revenues in fiscal ’23?
Scott Salmirs: Sure. So there’s really three core areas. There’s bundled energy solutions, EV and RavenVolt. And I guess the best way to describe it is our sentiment on those different industries — those sub industries, and we just feel really strong about EV. All the signs are pointing to strong growth there. Because if you remember, like there’s been some news coverage lately that EV is maybe taking a step back or is not as exciting as it was. But that’s all in context to the crazy growth rates that they’ve had in the past. And the truth is, what a lot of the car dealers are realizing is the impediment to this excitement is — they call it range fear that people feel like they’re going to run out of power. And that’s because there’s not a lot of infrastructure.
So for us, the catalyst, the way we see EV, the catalyst for our growth is going to be the fact that infrastructure is so light. So we’re really happy about our backlog. So EV is going to be a really strong segment for us. And RavenVolt, we’re really excited about. We have a very strong backlog, probably close to half of our backlog in Technical Solutions is around RavenVolt and these big projects. And the frustrating part, frankly, is the fact that it’s really hard to time these quarter-by-quarter, because the way you got to think about it, Faiza, it’s not — they’re basically battery backup projects, right? And it’s not like you’re going in and installing one battery, these are battery fields. Some of them are the size of a football field, right?
So it’s almost like a construction project and timing a construction project, getting the permits, getting the equipment. So when you look across a year, we feel really confident that RavenVolt is going to perform, but can I tell you whether or not, Q2 is going to be stronger than Q1? It’s hard to get that insight, but we’re getting better at it, frankly. We think the back half of the year is going to be stronger than the first half of the year right now. But RavenVolt is going to be another big, strong performer for ATS. And then the last piece is Bundled Energy Solutions. And that’s the one that’s going to be most pressured. And the way I want you to think about it, think about these big projects where you go in and retrofit a school, and it’s a $15 million project, changing out the lighting, the air conditioning equipment, the heating equipment.
And what ends up happening there is, it’s high capital for these schools, and the IRRs were typically really strong when interest rates are low. But now that interest rates are higher, it’s causing them to push and to see, will interest rates come down. What’s going to happen? And that’s why you’re seeing a little bit of a setback in Bundled Energy Solutions. And plus, there’s been a lot of government funding through the CARES Act, and so there’s been a lot of free money out there for schools. So we think that’s going to be sun setting towards the end of this year. So I would suggest that Bundled Energy Solutions will be soft in ’24, more excited about ’25. But that being said, they’ll still perform, just not at the kind of run rate that they used to be at, where it was over $200 million in projects.
