I’m curious – so that’s $17 million improvement. You’re expecting 15, I think, from the transformation plan. Maybe that’s not day 1, January 1 for full run rate. So I’m just wondering if you could sort of parse these numbers. How much of the visibility and confidence around the fourth quarter run rate and what – if you achieve that level, just the confidence, what needs to happen to meet that 30% EBITDA growth? And how much of this expected savings from a transformation plan feeds into that.
David Johnson: So again, fourth quarter, again, we’re having not hit our estimates for the last for four periods. Again, we emphasize to our team, you’ve got to put more focus into understanding those numbers, communicating more with our customers, getting commitments, doing supply plans and obviously, can’t predict geopolitical problems that may occur. But just taking the fact that we had no Aztec in the fourth quarter at all and that’s really generally turning our biggest quarter for Aztec, having Dacthal for the last four quarters, those who loan lead us to be very strong on what we’re going to see in Q4. I will say in October, in our in our OHP and our AMGARD lines, we saw very strong quarters. We saw a good strong quarter in LatAm and Mexico in October.
So we’ve got a pretty good optimism of outlook for Q4. Moving forward, yes, the $15 million, there are some areas that we’ve identified that will be in place by January 1, but a number of them will be implemented during the course of the year and phase in so that we would see kind of the full effect of that in ’25 year. We also – we have a plan. We are – we have – we’re kind of really into our third year of trying to get our entire fleet on board with the same QAD system. We’re now focused more on pushing forward at a faster rate on that than ’24 so that by the time we get that to ’24 essentially where we want to be. So yes, there’s – there are potential upsides in what we’ve mentioned, if we’re more attuned at implementing these cost saving measures as well as we’ll have a better outlook of how well the ’24 year is going to unfold, which is why we’re scheduling that call probably the later half of January, so that we can update on kind of the KPIs we’ve put in place to measure how we’re tracking versus that $15 million, what that outlook looks like for the balance of the year.
And then as well, our team gives a forecast. Every business unit does the 10th of each month. So with regards to our ’24 outlook kind of budgets are be done in July of the previous year. We’ve been tuning that budget based upon the measures that we’re taking but then as we get into January, we’ll know what happened in Q4, at least as far as revenue is concerned and have a much better view of how that ’24 year is going to shape up.
Chris Kapsch: Okay. That’s helpful. And also, maybe just a quick one for David. On the covenant amendments – if you achieve that 74, I’m assuming you’re in full compliance with the pre-amendment covenants. Is that accurate? Just wondering like what the nature of the – the amendments were and what you see in terms of – of what needs to happen in order to get fully back in compliance? And just if you could just talk about what the cost is for these amendments.
William Kuser: Just to sort of clarify for David. So the amendments are essentially giving us more leeway on the debt-to-EBITDA ratio. I guess, we’ve set this up purposely so that if our Q4 goes according to plan that we’re in a position to pull ourselves out of that, which would save us 0.5%. So again, kind of a function too of how much cash we collected at the year-end, we’ll determine what our debt-to-EBITDA ratio is. And then as far as the charge go ahead and…
David Johnson: So the cost was about $400,000 and then 0.5% on the interest rate for the duration of the amendment period, which, as Eric just described, could be as long as through September of 2024, but we could exit it early if our forecast for Q4 and the start of 2024 come through well.
William Kuser: And that 400 just so I know it’s not – not a hit – it’s amortized over the life of the remaining – it takes us through 26.
Chris Kapsch: Okay. Thank you.
Operator: Thank you. Our next question comes from Wayne Pinsent with Gabelli Funds. Please proceed with your question.
Wayne Pinsent: Hi, thanks for taking my question. Eric, so you touched on it a little bit there. Just curious on how quickly we’ll be achieving the $15 million of cost savings? And you mentioned, you’ll probably see the full amount in 2025, but just the cadence there. How much of it, because I saw in the press release, you mentioned it was operational, but also interest savings. So what’s the breakdown there? And then have you identified any one time or ongoing costs with that program?
Eric Wintemute: Yes. Well, there’ll be some capitalization certainly as we move faster on the QAD system. That is capitalized and amortized over a five-year period. If you look at each one of those comes with a different piece as far as phase in. So let’s just take raw materials, for example. We’ve identified some contracts that we’re going to have a go place into the first quarter. And as those benefits occur in manufacturing, we actually will see that pick up, and it would be in margin, but we would see that occur in as it gets sold. And normally, we kind of figured there’s like a 90-day delay time from manufacturing to sale, but obviously, it depends on SKU. With regards to onetime charges, we’re looking at that now. I think with our bank and our agreement with them, we can do each year, I think it’s $5 million of onetime charge, which does not affect our adjusted EBITDA with regards to the bank.
So I don’t know if that gives you the color or whether you’ve got a clarification on the final question or not.
Wayne Pinsent: Okay. So that’s kind of what we could expect you going at that $5 million or under run rate and cost of this going forward?
Eric Wintemute: Yes.
Wayne Pinsent: Okay. All right. Thank you.
Operator: [Operator Instructions] Our next question is from [Steve Hilton] of Private Investor. Please proceed with your question.
Unidentified Analyst: Okay. Hi, guys. I just had a quick question with the recent business agreement between AGCO and Trimble, does this complicate your sales program with your SIMPAS equipment?
Eric Wintemute: Good question. So Bob and I’ve had discussions with AGCO, but Bob has follow through and has probably better insight on that than I do.
