Justin Clare: Hi Daniel. So I guess the first one here, the $5 million of annual savings that you expect from cost reduction actions, just wondering if you could talk through how much of that is expected to impact your cost of goods sold versus OpEx and maybe what the impact to you know, either R&D or SG&A might be?
Daniel McGahn: I can talk about the impact. John you want to take the financial part of it.
John Kosiba: Yes, so good morning Justin. The vast majority of this is going to be OpEx. We didn’t break it down publicly, but what I will say is on the scale call it north of 75% will be OpEx related versus less than 25% will be COGS.
Daniel McGahn: I think from a capability standpoint. I’ll reiterate paraphrase something I said earlier as we are expecting more content per ship from the Navy, which means that when that happens, that means we’ve met certain development milestones, which means unless we have something else to develop, those are not cost that we need to continue to carry. I think when we look at the substation type products. We’re at a point now I think we’ve learned a lot about the sales leverage. I think we’re now going to demonstrate some operating leverage particularly in the back office. We need to continue to digest what we have, which means the need to go to develop something over the next quarters is very limited. So, but going forward, we still have the capability to be able to service our customers.
We still have the capability to be able to make changes or make adjustments. And we still have the capability to develop some new technology, which could translate into future products. But right now on our roadmap really is, we have to focus on the financial leverage that the revenue will bring. And that’s the near term focus for the team. And that allowed us to take maybe a very different look at our operating expense.
Justin Clare: Got you, okay. Thanks – for the color there. I guess then, just on the gross margin here, so it looks like gross margins are expected to improve in Q4. Just wondering is a high single-digit number for the gross margin reasonable there? And then is the improvement primarily due to the Neeltran kind of lower margin backlog rolling off or are there other factors like a change in the product mix are where this Q4, where you’re going to start to see some of these pricing actions that you’ve taken, you know, benefit the margin?
John Kosiba: So help with the second question, the first question, we don’t guide the gross margin. So I want to be careful not to give too much clarity on that. But what I will tell you is the gross margin improvements in Q4 will be driven by all three of those right we said Neeltran, gross margins are going to improve. We do have a healthy expectation of D-VAR revenue in the fourth quarter. So that’s inherently going to help the mix. And then as we continue to ship backlog in particulars so far the NEPSI product line has the quickest lead times. And so the pricing that we’ve been able to implement at NEPSI will flow through the P&L the quickest. And so you’re going to see it in all three areas, you’re going to see pricing, improve the margin, you’re going to see mix, improve the margin, and you’re going to see the impact of Neeltran improve the margin. And that’s just isolated its Q4, that’s really what we’re talking about as – and throughout FY 2023.
