Donovan Schafer: Okay. That makes a lot of sense. And then I wanted to actually follow up on EV charging infrastructure. So I appreciate. I think in the prepared remarks, you talked about focusing on fleets, large companies with very large fleets that put them in a better position to get the infrastructure in place. But that certainly has been a challenge even in some cases with large fleets. And so my question is, how do you — are you trying to — are you engaging with the customers in a way where you’re trying to get them, you’re pushing them to think far enough out of time for procurement, getting things in place and maybe, how it’s written in contracts? Do they have to take delivery if for their own reasons, they don’t get the charging infrastructure in place or is that a condition where if infrastructure is not there, then they don’t have to take delivery?
Tony Aquila: Actually, when you have a model where you sell to build, you actually have the luxury of doing a better service to your customers because you’re not forcing it upon your terms are actually more aligned to their interest, which creates greater partnerships. We don’t sell to anyone that can’t charge and we help them figure it out. We see business opportunities there. They’re not in our priority — immediate priority list. But this is why we have to concentrate on certain state rollouts and certain customer configurations because they have to charge these vehicles. Range anxiety is a real thing for those of you who have been out there. It was a real thing when Henry Ford came around and started bringing us mobility on wheels instead of by hoof.
And so we’ve been very realistic about it, and we focused on how our technology is universal, it’s adaptable to all the different types. We’ve never had an issue with that, but we don’t try to oversell people on the charging infrastructure. We do make sure we know their routes. What their delivery schedules. One of the benefits of our business is these are known activity routes. So it’s a lot easier to figure it out versus unknown and unrestricted systems. In addition to that, our systems are developed such that the fleet customer can control the settings in the vehicle. So they keep a certain set of things which extends range because range can be different based on drivers. And we’ve used technology to minimize that. That’s workflow. That’s workflow efficiency.
That’s increased return on capital and less greenhouse gas emissions activities. So it’s things like that, that we’ve really concentrated on to take away the risk of that. At the same time, as Greg mentioned, with the DOE, they’re rolling out, giving money to help get the raw materials, we’re big supporters of that. We need the time on our side before those loans would even be entertainable for us, just as us. And so we want to see that infrastructure because that will help us step up to the next 20,000 in the next 20,000. We know the market is there. We know the market is there, particularly with our customer base. It’s not economically sensitive because these vehicles yield a return on capital. And so getting that charging infrastructure right, is it precursor before we qualify the customer.
Donovan Schafer: Okay. That makes lot of sense. I’ll take the rest of my questions offline. Thanks, guys.
Tony Aquila: You bet.
Operator: Thank you. Next question is coming from Sameer Joshi from H.C. Wainwright. Your line is now live.
Sameer Joshi: Hey. Thanks for taking my questions. Just a clarification or a little bit more light on the manufacturing assets that you have purchased. Will we lead any modification, customization or the to be fully implemented? And then once they are — well, first, what is the time line for that? And are there costs associated with that? And when should we start seeing the benefits from them? Like, are you already using this or will it be six months from now, 2024, ’25?
Tony Aquila: Yes. Some of the equipment is deployed. Some of it is being deployed and some of it needs modification. So your question really spans across all the elements is the answer. If you look at the slide that we have up here, you can see some of this has got U.K. power systems, and we got to change the controllers. We know the cost. We’ve worked with the manufacturers. In many cases, we’ve gotten actual brand new warranties extended to them. And the costs are relatively small as far as some of the integration elements, which I think is a question you may be alluding to. But we brought most of that programming in-house as part of this strategy. So we wouldn’t be caught at risk. Our team has done a great job at developing those skill sets along with AI to help us accelerate our ability to bring our product to manufacture.
Sameer Joshi: Understood. And then just another one on the 2024 sort of outlook and achievements. One of the items is a seven state rollout of service centers. Is that within 2024 or will the rollout begin and you will have maybe one or two centers or one or two states with service centers?
Tony Aquila: Yeah. So we have a team — a special team. They’re much like a lead soldiers. They’ll parachute in, if necessary, and we’ve kind of mapped out our rollout centered around where we have facilities, so we can deploy teams. We explained to our customers why that’s important to them. In addition to that, when you have a lot of vehicles that are running often one to two ships, you can have your fast action team show up and at night and have and do the service activities on location. So the good news is 80-plus, I think we’re getting close to 86% of all our activities are over the air. We’ve been successfully deploying that. There’s some areas we’re improving with our releases, but our over-the-air upgrades have been going better and better.
As many of you know, with electric vehicles, it can be touching both. And I think we’re just way farther along because of the help we’ve gotten from the customer base that has been actually driving these vehicles for two years. I mean, it’s not like we’re rolling the dice. And software is key to the experience. I mean even in your ICE vehicles, how many of you have problems with your plugging your devices into the vehicle. So we’re very sensitive to keeping it simple, keeping it democratized and upgradable. So as the hardware changes, you can upgrade that piece of hardware. You don’t have to buy a new car. To us, that is a very important way of aligning to our customers’ interest, and it’s also a very profitable business for us as well.
They win, we win.
Sameer Joshi: Thanks for taking the question. Good luck for 2024.
Tony Aquila: Thank you.
Operator: Thank you. Next question today is coming from Jaime Perez from R.F. Lafferty. Your line is now live.
Jaime Perez: All right. Thanks for taking my questions. Hey, everybody. The assets that you guys purchase is everything in place? I mean, do you need any capital to get up and running? Has it been sort of optimize? What’s the sort of status of the equipment…
Tony Aquila: Yeah. The good news is, it’s as if we bought new equipment. I mean it’s new literally. And because, unfortunately, the markets in some cases of those that didn’t make it, wanted to see big facilities with all this stuff rather than drive a product and see it hard at work. So we’ve been able to pick those up. In some cases, it’s just power translation. Others is just normal software programming for the robotics and we brought that in-house. But yeah, there’s always some expense. I’d probably say probably somewhere in the $0.05 to $0.07 on a dollar net cost for us, but it’s fixed because we brought it in-house, most of it. So maybe we got a few points of variable. But no, we sized all that up. Our team went on site before we made the move.
Often we were the first ones to actually ignite the process because we were like, hey, we’ve got the money. We’ll give you the money. We’ll buy the equipment, and we’ll buy it all, and here’s what we’ll buy. And we even will try to help them sell what we don’t want. So — but this is direct shareholder value, as you know, Jamie, right? So…
Jaime Perez: All right. One more question. I know we talked about EV infrastructure. What about on a fleet management? Because I know Tony you come from the software side. Any development on that?
Tony Aquila: Yeah. So look, I am excited to — similar to the fact that we’ve always kept things a bit quiet until we got them pretty far in motion, as you can tell. I’m really excited about where we are as a TM as an OE versus an OEM, how we look at things and the benefit we bring to our customers. I will tell you this is a very, very important area to me, and it’s a very, very meaningful thing to our customers. So the answer to that is, and a lot of this will be proprietary configurations for our customer base. And of course, that makes a greater relationship on a long-term basis in a residual return on capital for us over time, obviously, you’re entering the software margins. By the way, the example we posted up about learning from what amazing things Henry and Elon did, but when you look at ours, ours is not including software revenue at this time because we’re not exposing the market to that.
Jaime Perez: All right. Thanks for taking my questions.
Tony Aquila: You bet.
Operator: Thank you. Next question is coming from Pavel Molchanov from Raymond James. Your line is now live.
Pavel Molchanov: Hey, thanks for taking the question. Can I just clarify, as you guys look for kind of interesting distressed stuff to buy. Are you looking for only physical equipment or would you be open to buying an entire fab at a particular site?
Tony Aquila: Yeah. So look, with respect to where we have sovereign partners, as you know, we have aligned with the sovereign partner, that partner is helping us refine our supply chain. They have the ability to invest capital and tooling and help us pay on a piece price. And we’re really working on some things that will continue to evolve out there. But what I will tell you is we’re not diving deep into the water. We’re being very, very cautious as to how we move from a physical site location. We’re dead center of the United States right now. We have a free trade zone, which means we can export, we can import. We can do everything we need to do and do a dead-center mats in the U.S. on I40. So our cost to deliver is less. Our cost to receive is less. So I would say it would have to be a deal where we got paid and it relined with a strategic move, and it was aligned with somebody less sovereign who was helping us expand. If that makes sense.
Pavel Molchanov: Yeah. Absolutely. And in fact, in that context, given that your recent acquisition was from a European-based company. Are you open to establishing a production footprint across the Atlantic?
Tony Aquila: I mean, next week or late this week, I’ll be leaving for a couple of continents of meetings that we’ve been engaged in with people for, in some cases, the last 1.5 years as we lay this out. If you study me from my history and my last company, we grew our business to 96 countries very profitably. We figured out the model. We were – we moved linguistically, socially and alignment with our product scalability. So that was kind of my earlier point where you got to get the four pillars, right, before you hit the volume curve. It’s not impressive to have to pull all these things back. And so the answer is there is a plan. We’re focused on that plan. And when those pieces are lined up and well underway, is when you’ll likely hear about it.
Pavel Molchanov: Got it. Thanks very much.
Tony Aquila: You bet.
Operator: Thank you. Next question today is coming from Poe Fratt from Alliance Global Partners.
Charles Fratt: Yeah. Hi, Tony. Hi, Greg. I’ll make it quick since the call going on so long. Can you just help us understand the cash outflow number? Does that include CapEx or is CapEx over and above that?
