I’m not going to turn around and tell you that there’s a recovery and there’s a way enormous tidal wave coming. That’s not the case. But I do think that we see a much more positive outlook going forward. And if we hit the guidance that we’ve just given, which we obviously would intend to do because that’s what we’ve just provided, that would be similar to the back end of last year and if we can hit the record revenues that we saw at the end of 2023 and then continue that, then I think we’re — as I say at the beginning, we have a much more positive feeling to the business and the industry today than I did six months ago.
Paul Knight: All right. Thank you.
Operator: Thank you. One moment for our next question. And our next question comes from the line of Max Smock from William Blair. Your question please.
Max Smock: Hey. Good afternoon. Thanks for taking our questions. Maybe just starting off here, I was wondering if you can give some more detail around what exactly the change in estimated variable consideration under a contract where uncertainties have been resolved relates to and what the impact was in the quarter. And then, similarly, what was the impact of your customers’ decision to defer that PPQ campaign until after annual maintenance shutdown and is that campaign now ongoing?
Dan Hart: Sure, Max. I’ll start off with that. So the change of variable consideration is another way to say that it was a change in estimate where the revenue recognized on certain programs was less than originally estimated at the beginning of that project. Under 606 revenue rec rules were percentage of completion shop. So some of those estimates can change during the period. So the impact of that in the quarter was roughly $2 million of gross profit. So around 8 percentage points. And as far as the deferral, deferral was a similar gross profit hit of roughly 8 percentage points and as far as the batches themselves. Nick, I don’t know if you…
Nick Green: Yeah. No. I mean, the decision was a mutual decision and PPQ campaigns are something where you’re executing three batches identical. That’s always a lot easier when you do them back to back to back. Where we were was that we would have had to split those across the shutdown, which we felt was better not to do that and keep them all in line. Otherwise, we would have had to move the shutdown, which again, was not an ideal situation. So it was a mutual decision between us and the customer. The program’s now up and ongoing and going as planned. So, again, not what we ideally would have wanted to do, but I would always prefer to run a PPQ with three batches literally back-to-back.
Max Smock: Got it. That’s helpful. Maybe just asking a follow-up to Jacob’s earlier in terms of the backlog. I’m just wondering how confident are you in the actual quality of that work that you have in backlog? If there’s any detail you can provide around what portion of your backlog is currently on hold and how that relates to maybe last quarter when we spoke, and just in general, how you would characterize your visibility into whether or not that work is going to actually start to move forward here again in the near future. Thank you.
Nick Green: Yeah. Our backlog typically converts at, I would say, north of 95%, and probably, closer to or towards 100% on that one. So, we really — it’s firm business. There’s none of it on hold as per se. I do know — I know of one program that I got news of last week that’s actually been brought forward. So when Dan articulates that it’s not getting any longer, in part, I might argue that there’s a little bit of a pull in there. But there’s always a little bit of switching, swell forward and backwards, but no material change and certainly from a conversion perspective, we expect the vast majority, as I said, more than 95%, if not closer to 100% of that to execute.
Max Smock: Okay. And then if I could just sneak one more in here.
Nick Green: Yeah.
Max Smock: I think previously when we talked, Nick, you talked about holding backlog flat year-over-year as being kind of a win here in fiscal 2024. It’s actually stepped up a little bit relative to where you’re at, at the end of last year, just because revenue is a little bit light here in the quarter. But wondering how you’re thinking about the outlook for bookings growth in the back half of the year, giving your commentary in particular around seeing a return of early-stage projects in the mix during the quarter and whether or not you’re still thinking about flat backlog year-over-year as kind of the goal for fiscal 2024?
Nick Green: Yeah. I mean, my crystal ball’s a little cloudy on that one. The difficulty I have, Max, is that, signing from quarter-to-quarter, as we’ve talked in the past and I’ve mentioned also publicly is lumpy. We do — we’ve seen 69 million signings in a quarter and I think I’ve seen 29 million signings in a quarter. So it can be very erratic. I think, to be frank with you, if we can hold the backlog where we mentioned before, would be — it would still be a reasonable result. I would say that there’s a bit of optimism. But again, some of these are — some of the opportunities that we’re talking on and working on are quite significant and they’re binary. And when you come second, you don’t get 30% or 60%, you get zero.
