It’s going to take us a quarter or two to kind of build into the profitability. And when I mean profitable, I mean, EBIT, which includes that depreciation sort of overhang that’s going to be a high fixed cost to work through. So we’ve always contemplated that you recall the pace that we had in the materials at Investor Day that contemplated that sort of headwind to D&A that we had to sort of grind through from the revenue to ultimately get it to be as profitable as we hope to be.
Scott Deuschle: Okay. Thank you.
Robb LeMasters: Sure.
Operator: Your next question comes from the line of Ron Epstein with Bank of America. Ron, your line is now open.
Ron Epstein : Hey, good afternoon folks. Just a couple of quick ones. On the last quarter of the year the way things are lining up it seems like it would be the best quarter ever for the company. What gives you confidence about that? And is there any one single thing that’s driving that? Like what can we as outsiders keep an eye on to just get a sense that that’s going to play out?
Rex Geveden: Hey, Ron, it’s — it would not be a record quarter at the midpoint of the guidance. We’ve delivered quarters like that before. I think last year it was $0.95. And so two years ago $0.95 last year was 93%. So it’s in the range of what we delivered in the fourth quarter. We true up the TSG contracts. That comes through obviously in a growing business like ours particularly at these rates the fourth quarter tends to be the strongest quarter in the year. So we’ve got reasonable confidence we can deliver that. And we’ve got a track record of having done so.
Ron Epstein : Got it. Got it. And then just maybe a bigger picture question on just submarine demand a bit large. Are you getting any signals from the Navy of Virginia-class rates moving at all? I mean there’s been supposedly there’s been investments in the industrial base. And the Navy keeps talking about we want three Virginia class and everybody is struggling to get out to right like 1.7, 1.6. Are you seeing any movement upward there. I mean how should we think about Virginia class down the road? I mean will they ever get to 3? Is that just sort of a dreaming number? I mean how should we think about it?
Rex Geveden: Well, I think the right way to think about it is that the steady-state production rate should settle out at two. And I think that it’s fair to say, the constraint there is the shipyards and certainly not our production capacity. We’re kind of producing to the shipbuilding schedule at present rates. And so the shipyards have to get to that rate. And if you layer ocean on top of that people are talking about sort of 2.3 Virginias a year coming out of the shipyards. I don’t think there’s a production rate of three that’s anticipated but blending those Australian ships and get to 2.3. And I think, clearly, the investment from the Congress and from the Australians is intended to support that. And so it’s my expectation that the industrial base will respond appropriately.
Ron Epstein : And what’s your sense Rex on — I mean, in terms of labor and infrastructure but the shipyards are going to actually need to get there? I mean is that something that can happen in a couple of years? I mean how hard is that to actually do to get there?
Rex Geveden: Yes, I certainly, won’t speak on behalf of the shipyards there. I just — I can speak to our own experience on that, which is labor has been hard to come by and we’ve really had to double down to try to get it. That said I believe in capital markets, free markets that the supply chain tends to organize around the demand signal, so I’m hopeful that a little self-correct here in the next over the next few years.
Ron Epstein : Yes. Got it. All right. Thank you very much.
Rex Geveden: Sure.
Operator: Your next question comes from the line of Pete Skibitski from Alembic — I’m sorry I apologize, Alembic Global. Your line is open, Pete.
Pete Skibitski: Hey, good evening guys. Nice quarter. I just want to follow-up on Scott’s question on commercial EBIT margins in 2024. You’re expecting them up RECONNECT — just my recollection is that you were expecting when Tech 99 does get FDA approval I think you quantified it to be $20 million of incremental D&A. RECONNECT Are you still assuming that in those EBIT margins being up in 2024 you’re just offsetting it? Or could you just clarify?
Robb LeMasters : No. As I mentioned, D&A effectively come when you’re commercial. So it’s going to match the sales if you will. And so we’ve talked about how that is a very small delivery. The way I would think about it is, that model year 2024 without sales, without earnings and without D&A tied to that specific product in 2024. If we get lucky and pull it forward, I think it will be relatively neutral to EBIT if you will. I don’t think it’s going to scrub your model if we get a sliver of that in 2024. That’s the way I would think about it.
Pete Skibitski: Okay. Okay. So the incremental of D&A will be more of 2025 of that.
Robb LeMasters: That’s right. And it will come with a full — hopefully a full year of revenue right? So then you’re able to like absorb all that fixed cost. But you’re right in terms of the magnitude of the D&A that was the number we gave out. So I would model in a full year, which comes with all the goodness around a fully built-out product line. Hopefully, maybe not full in 2025 right? We’ve always promised that in the 2025 plus time zone but we’ll see how it goes.
Pete Skibitski: Got it. Okay. And then maybe one for Rex. Rex on the Canadian financing for Romania, usually that’s a long pole in the tent right once the financing is kind of set. Do you guys have any sense of timing for when you might sign a contract for that project? Is it still later in the decade? Or is that kind of being pulled forward?
