Operator: Our next question will come from Matt Suarez with Investments. Please go ahead.
Unidentified Participant: Hey. Good morning. Thanks for letting me ask the question. Obviously, you have an extremely solid balance sheet, but I have a question about your idle Baja and Playas de Rosarito (ph) purchase looks like about 10 years ago. Can you let me know what you paid for that land, what the value of it is today and what your current plans are for that asset?
David Sasnett: Well, the land is reflected on our balance sheet, Matt. It’s about $21.5 million. That’s what we paid for it. We’re presently marketing the land, tempting to sell it. I don’t want to give you the — what we have as the appraised value because I think that would infer that, that would be the price that we would sell the land for, but it’s significantly higher than the amount that we have recorded on the balance sheet. We continue to market this land. We’d like to sell it at the right price. We’re certainly not going to sell it for the amount, we think, significantly below market value. but the land is indirectly involved in our claim against the Mexican government. If you read our financial statements, you know that we’ve initiated arbitration in international court gets the government of Mexico for the cancellation of there contract with us to build a plant on that land in Baja, California.
But we feel confident that when we do sell the land, we’ll get more than what we have invested.
Unidentified Participant: Okay. And if the land does get sold, then it just gets netted out of the current claim?
David Sasnett: That’s correct. I mean whatever the court would award us the damages that we take out the value of the land that we received.
Unidentified Participant: Okay. Very good. Thank you.
Operator: Our next question will come from John Bair with Ascend Wealth Advisors. Please go ahead.
John Bair: Thank you. Good morning, Rick and David.
Rick McTaggart: Good morning, John.
David Sasnett: Hey. Good morning.
John Bair: Nice quarter and good momentum. A couple of questions. On your M&A front, if those 2 were to go — do you go forward, do you anticipate a similar type structure that you did with PERC and Aerex where it’s not a full 100% acquisition? And would you consider — would it be a cash deal or cash and stock or how do you look at that?
Rick McTaggart: Well, I mean, it’s a little early to say right now, but we look at the transaction that is in the best interest of the shareholders. I mean it depends on the size of it. It depends on the selling parties’ willingness to continue in the business and that sort of thing. So, I can tell you that the industrial deal is more of a joint venture-type arrangement. The other acquisition, it’s a little early to say how that’s going to work out. But we’ll do the best that we can for the shareholders, which includes making sure that there’s a transition period for the business.
David Sasnett: John, when we bought the other 39% of PERC, we sold stock as part of the acquisition cost at the request to the PERC on Nordic shareholders. Given the amount of cash we have on our balance sheet, I would presume that most of the acquisition costs or anything we did going forward unless it’s a very large acquisition would be just paid in cash and not through the issuance of our stock.
John Bair: That’s good. Good. I wanted to also ask you in your press release and Rick touched on this in his prepared remarks about the supply chain constraints easing up a little bit. And so, the question is, I’m assuming this means that you were able to get the components that you needed to satisfy the orders that you had sooner than previously expected. Is that the way to look at it?
David Sasnett: No, I think it’s better to look at it as things were really quite terrible before John. And the supply chain has improved. It’s not back to where it was before we had all this economic chaos that was touched off initially by COVID, but then is carried on due to other factors. Our supply chain still isn’t humming like it was four years ago. But it’s improved to the point where now we can start getting materials and pushing production to the plant. But still, we’ve seen an increase in costs and a delay in delivery times. It still takes a long time to get some of this stuff. It’s just gotten better. It would be the best description for it.
John Bair: So, if your input costs have gone up, are you able to pass that along to previous orders that add that on to improve your margins and so forth?
Rick McTaggart: Some of the contracts we have, in particular, the Water Authority contract for the desal plant allowed for inflationary adjustments to the purchase cost of the plant, other orders that we may have through Aerex through manufacturing do not. So, it’s all about locking in the pricing with the suppliers as close for the PERC projects for that matter. I mean, locking in subcontractor and supplier costs as early as possible after you sign the contract. So — and then any new orders we’re getting through manufacturing, I mean those are all being priced at the new cost. So, I don’t think we’ve seen any range is sort of losses on any of these orders.
David Sasnett: No, there’s not been a substantial amount of inflationary pressure on our margins yet, John.
John Bair: Okay. That’s good. Hopefully — hopefully, the margins will continue to improve. Very good. Appreciate you taking my questions and good luck continuing going forward. Looking forward to it. Thanks.
Rick McTaggart: Thank you, John. Take care.
Operator: All right. At this time, this concludes our question-and-answer session. I’d now like to turn the call back over to Mr. McTaggart. Sir, please go ahead.
Rick McTaggart: All right. Thank you, Joe. I just want to thank everybody for joining us today. Good questions, and we certainly look forward to hearing from you again in May when we release our first quarter results. So have a great day.
