Rex Geveden: Yes. I don’t have a lot of clarity on that one Pete. I would say certainly later decade.
Pete Skibitski: Okay. Okay, got it. All right. Thanks guys,
Rex Geveden: Yes. Thanks.
Operator: Your next question comes from the line of Bob Labick with CJS Securities. Bob, your line is open.
Bob Labick: Thanks. Good afternoon. I wanted to ask — sorry if I missed this, but can you give us an update on the time line and expectations for the Hanford Tank program. I read somewhere recently that bids have been resubmitted and things like that. How are you treating that in your 2024 outlook as well?
Rex Geveden: Yes. Hey Bob. I’ll give some details on that. I think you certainly know that we’ve been through court actions on that in the court. The appellate court basically sent the matter back to DOE for corrective action. The DOE did conduct its corrective action and as the original proposals to resubmit, we have resubmitted that proposal. In the meantime, the competitors have issued a protest that’s gone through the GAO. So there’s a lot of legal churn here, and that’s all I’ll say about that. And from a standpoint of how it might impact us financially, I don’t think we’re expecting any transition on that contract until about — at least throughout the middle of next year.
Robb LeMasters: Yes. We’re — how we’re looking at 2024 in terms of that guidance the same way we talk about 2023, right? There’s a bucket of good things that can happen on bad things and those sort of chunky wins and we probability weight those, we time adjust all those. And frankly, just — we try to be conservative on all those factors. So in 2023, as you know, drag will push a little later for us out hamper stuff sell out, and we’re still obviously going to hit the guidance or that’s our plan. So we try to put all that into the blender and guide accordingly. So I think we’ve learned our lessons on the TSG front that these things just take longer. So we contemplated that mid-single-digits. We factored that in that when we’re going to ramp and how that margin is going to work.
Bob Labick: Got it. Okay. Great. That makes a lot of sense. And then obviously, you discussed Moly, the FDA approval process for Tech99. You touched on actinium sales and non-Moly sales up in medical up 30%, 25%, 30%. Can you — maybe you could just go a little one level deeper and talk about the key drivers there and any opportunity set from the Bayer Actinium and all that kind of stuff please?
Rex Geveden: Yes, sure, Bob. We’ve got growth showing up across the board in our medical portfolio. As you know, we have diagnostic products and also therapeutic products. And so there’s strong – very strong demand for germanium. We’re seeing real growth there. Strontium is growing. TheraSphere continues to grow at an impressive compounded rate. Actinium 225 is showing up in our numbers a little bit because we’re supporting clinical trials with our own medical device, our own generator, which produces a non-carrier added Actinium and it’s the only such generator on the market. And then we’re anticipating feathering in some lutetium-177 sales for next year. So – and there are underlying things to iodine and other products that we have. And so yes, the core business is quite strong. I think it’s a bit of an underappreciated asset in BWXT and we see increasing demand in virtually every product line that we have.
Bob Labick: Okay. That sounds super. Thanks.
Rex Geveden: You’re welcome.
Operator: Your next question comes from the line of David Strauss with Barclays. David, your line is open.
David Strauss: Great. Thanks, good evening.
Rex Geveden: Hi, David.
David Strauss: Hey. So Rob, Q4 free cash flow working capital reversal to get to around $200 million. If you could just walk through how you get there? And then for 2024, I don’t know how I should interpret the comment of improved working capital. Does that mean it’s less of a drag? Or does it mean positive contributor to cash flow because I know you’re seeing free cash flow growth above mid-single-digit EBITDA growth but I would have thought with kind of flattish CapEx that we could see some pretty significant free cash flow growth next year? Thanks.
Robb LeMasters: Sure. Yes. Thanks for the question, Dave. Yes. So the way that we’re thinking, we always have very significant Q4, if you just look back the past couple of years, as a percentage of our free cash flow is always meaningful and this year in Q4, if you just think about where we stand for the year, we’re at about $40 million of year-to-date free cash flow Therefore in order to hit obviously the $200 million bogey, we’ve got to have $150 million plus. And the way that we’re thinking about it is we’re going to have a big fourth quarter in terms of profit just in general, so you start with that. And if you just think about how the cash flow statement works, right you have net income, you have D&A, you have stock comp and JV income, that gets you almost $125 million, if you just look at what we’ve already guided that’s sort of your starting point for operating cash flow drivers.
And then you need to work higher. We always have a pretty big retainage that generally is around $25 million. You have accounts receivable, you have a SIP release. All of that gets you comfortably over $20 million of operating cash flow for the fourth quarter and then you obviously back off CapEx. So we have a very clear path. We know the items that are coming in. And so that’s how we’re thinking about fourth quarter. You’re right. First of all it’s pretty early to know where we stand for 2024 for free cash flow. And there’s always things that wash between fourth quarter of 2023. And first quarter 2024. So it’s hard to give a growth rate when you don’t know what your base is for 2023, we were using $200 million obviously, just in general but whether it’s 195 or 205 matters a little bit.
