Eric Blashford: Good morning, Amit.
Amit Dayal: With respect to the new tower model start-up costs, are these out of the way for you now?
Eric Blashford: Yes.
Amit Dayal: Okay. So, any margin pressure from that is now not going to show up in the next few quarters?
Eric Blashford: Correct. We still have a margin because — again, it was a moderately large margin deal, as I mentioned before. But the start-up cost, the normal start-up costs were incurred in Q4. We’re past those.
Amit Dayal: Okay. Thank you. And then, with respect to sort of your working capital and cash flow from this $175 million order, do you get any upfront sort of payments as you begin work? Or are these mostly collected once deliveries take place?
Tom Ciccone: So, as you can see from our year-end balance sheet, we’ve collected a significant amount of deposits, and that primarily relates to this order. So, you can see we have — we are collecting that — we have collected them upfront, and we do expect deposits to become, once again, a significant part of our operating working capital, at least when you compare it to where we were in 2022. The balance at year-end 2022 was an anomaly. It’s an extremely high balance. We do not expect deposit balance to continue at that level. But nonetheless, they will be significant going forward.
Amit Dayal: Understood.
Eric Blashford: And so, if you’re projecting AR balance and cash balances, as we produce against this order, we would all, of course, collect the remainder of the balance.
Amit Dayal: Yes. Understood. And then, with respect to sort of your capacity situation, you’re roughly at 50% with this new order. And obviously, given where the IRA stands right now, the expectation should be that your backlog is going to increase, et cetera, over the next 12 to 18 months. If you get to a point where your capacity is completely spoken for during that period, so what are the next steps or options in front of you in terms of continuing to capture this opportunity?
Eric Blashford: Yes, that’s a great question. I will tell you right now, we’re in active planning. We’re executing against it to increase our capacity in our Southern plant by 10% to 15%. That is somewhat limited by available equipment because equipment is out there. Lead times on equipment are out there. So, there’s one answer for you. If we continue to see the strength, we can go beyond that. In Manitowoc, we’ve got plenty of volume left to sell. We also can expand that facility, if needed. There was one point, we were doing 20, 25 sections a week out of that plant. So, I think we’ve got plenty of room to take more orders before we even look at expanding Manitowoc. But that is also an option. We have space on that peninsula there to expand as necessary.
Operator: Our next question comes from Martin Malloy with Johnson Rice. Please proceed you’re your question.
Martin Malloy: Good morning.
Eric Blashford: Hey, Martin.
Martin Malloy: Hi. I wanted to ask you about the competitive landscape out there. And maybe could you just take a moment to talk about capacity in North America, if you’ve seen any shuttered in the last couple of years during the downturn for wind towers and also maybe the — what the export — I’m sorry, the import picture looks like for tower sections into the U.S.?
Eric Blashford: Well, first, just as a reminder, we did win three trade cases, the Wind Turbine Tower Coalition of United States won three trade cases. So, those are still active, and we are defending those. But we still think there might be 1,000-or-so towers that are coming in and maybe there’s going to be new entrants in the market that will pop up because of the demand in the U.S. now because of the IRA Act. We do believe that even with idled facilities potentially coming back online, there’s still more demand than there is supply. So that looks — that bodes well for the participants in the tower market in the U.S. for the several years to come.
