Operator: Our next question comes from Justin Clare with ROTH. Please proceed with your question.
Justin Clare: Yes. Hey, guys. Thanks for taking our questions here.
Eric Blashford: Hi, Justin.
Justin Clare: I guess — hi. I first wanted to ask about utilization for the Heavy Fabrication segment in 2023. So just based on your current bookings, do you expect the utilization to be pretty even at 50% throughout the year? Or are there going to be some — is it going to be a little bit slower as you start up production in the early part of the year? How should we think about that? And then, based on what you’re looking at now, what’s the potential that we see utilization pick up maybe above that 50% in, let’s say, Q3 or Q4 with additional orders for Manitowoc?
Eric Blashford: Yes. Well, since we’re talking about utilization in the plant, let me talk about plant specific. So, in our Abilene plant, as I indicated before, the majority of this order will be produced there, but it will be produced in both plants. So, we’ve got capacity to sell in our Northern plant, (ph). So, I think the 50% is good to think about across our businesses. But let’s keep in mind that in our Northern plant, our Wisconsin plant, we also did quite a bit of industrial fabrication work in addition to towers. So, I think the utilization of that plant would be above 50%.
Justin Clare: Okay. Got it. And then, you did mention that there will be some negative impact in Q1 from lower-margin projects and then startup costs. Wondering if you could quantify that? What is the potential full impact of that relative to, let’s say, your 2023 EBITDA guidance? And how should we think about the change between your profitability in Q1 versus Q2?
Eric Blashford: I would say it’s ratably increasing over each quarter for the year. This low-margin order that we took, in retrospect, I’m really glad we took that order. We took that to make sure we had adequate plant capacity and maintain our labor force in one of our plants in our Abilene workforce. That order is going to take us into Q1, and we’ll finish it in Q1. So, I would say if you’re looking at how to project, I would project modest EBITDA in Q1 and growing through two, three and four.
Justin Clare: Got it. Okay. And then, finally, I wanted to ask about the manufacturing and credits. At 50% utilization, it seems like you could see a $15 million benefit to your gross profit. I wanted to see if that’s roughly what you’re baking into your expectations for the year. And then, how should we be expecting the credit to flow through your financials? Like I’m assuming it’s not in revenue, but it will impact gross profit and will impact adjusted EBITDA. Is that the right way to think about it? And then, just one other point on that is just when do you expect to receive cash for the credits? And how much visibility do you have into that?
Eric Blashford: Yes, I’ll take the first portion, and then I’ll turn it over to Tom for the second portion. With regards to realization of the credits, there’s a couple of things that we need to consider. A, we’re waiting for the IRS guidance. We expect that to come out in the next quarter or two, but I haven’t found a statute that requires the IRS to do it by any specific timeframe, Justin. So, we’re being conservative. But, yes, if it was exactly mathematically correct from the first part of the year to the end of the year at 50%, I think your math is sound. We are not including that much in our guidance because we’re just not sure about it.
Tom Ciccone: And Justin, I’ll address the geography question. So, in terms of our P&L, we’re — through discussions with our auditors, given the lack of guidance, right now, we’re leading towards it’s going to be a contra cost of sales. So, you’ll see it show up in the cost of sales area on our P&L. And so that will impact all of our margin analysis, CM, GM as well as EBITDA percentage. But again, we’re going to follow best practices and whatever comes out before us, if there’s guidance from the accounting firms. In terms of monetization, we’re looking at that. Absence of any action, we won’t monetize these credits until 2024. But the statute does call for full transferability of these credits. So, we are having discussions with — albeit very preliminary, we’re having discussions with various institutions that might want to broker a deal for transferring these credits to a taxpayer who can take advantage of them right away.
Eric Blashford: So, Justin, to add a little more to that, as we forecast and put these credits in the guidance, it would be more backloaded towards the latter part of the year, what we think we’re going to be more certain. The other couple of things that we need to be mindful of is they are per megawatt. So, we’re not exactly certain the magnitude of the towers, the capacity of the tower, the rating that we’re going to be producing towards the end of this year. So, that’s another reason for conservatism. A 3.4, 2.5 megawatt tower has a greater credit than a 2.8 as an example. That’s the reason for moderation.
Justin Clare: Right. Okay, great. Very helpful. I’ll pass it on.
Eric Blashford: Thanks.
Tom Ciccone: Thanks, Justin.
Operator: Our next question comes from Amit Dayal with H.C. Wainwright. Please proceed with your question.
Amit Dayal: Thank you. Good morning, everyone.
