Jerrell Shelton: Yes, we have. We thought quite a bit about it and we studied China quite a bit. Look, China is the second most powerful country in the world and has more trading partners than the United States, an extremely important country, and it’s not going away. And we have an investment in China. We have a plant in China, and that plant is staffed by some very capable people. And we have an initiative to compete better in China, given President Xi’s buy in China, what’s made in China. And so we’ll be manufacturing freezers there in the future for that Chinese market. But the Chinese market is – there are some risks, but you have to pay attention to the rules of the game and play there. We’re not going to go back to the thirties and forties with China.
China is here to stay and we have to learn how to work with that economy and assess the risk and move forward. We only have about 5% of our revenue exposed right now, but we think the potential there is substantial over time. It’s an economic recession right now, but it will get out of that over some period of time.
Philip Song: Got it. Thank you so much. I’ll hop back in the queue.
Operator: Your next question comes from Lucas Baranowski from UBS. Your line is now open.
Lucas Baranowski: Hi, this is Lucas on for Dan Leonard at UBS. I guess to start things off, there’s definitely been an increase in oil prices since the start of the year. Given that increase in costs, are you finding that you are able to pass that on to customers? And should we expect any kind of a margin impact there over the near term? Thanks.
Mark Sawicki: On extraordinary situations, we do have surcharges that we pass on – where we pass on extra cost. So I don’t think you should expect margin impact from the petroleum increase.
Lucas Baranowski: Okay, thanks. And then just one more here. I guess, going back to the China theme, you touched on it a bit the initiative you have to begin manufacturing locally a little more over there. Are there any updates you can provide on how that’s progressing and when that new capacity could come online?
Mark Sawicki: Well, of course, it’s a small initiative, given the entirety of our company, and we’re not in any hurry to make that investment right at this particular time, although that motion is still active. So you would see – probably mid next year, you would probably see made in China product coming out of the Chinese factory in addition to doors, it would be freezers as well.
Lucas Baranowski: Okay, thanks. That’s all I had.
Mark Sawicki: Thank you.
Operator: Your next question comes from David Larsen from BTIG. Your line is now open.
David Larsen: Hi. Can you talk a little bit more about these cost reduction efforts? And I know that you have been very reluctant to reduce labor across your firm, that’s certainly very admirable. But just any more color there would be helpful. Do you expect to become EBITDA positive by, say, 4Q of 2024 or any sense for the number of positions that might be reduced or anything like that would be very helpful. Thank you.
Jerrell Shelton: I just want to make a couple of broad comments and then turn to Robert for more specific comments David. First of all, we are not reluctant to adjust our business in any way given circumstances after we have assessed them, we take great pride in being responsible in the way we manage our business and the assets that belong to the shareholders of this company. So, it’s our fiduciary responsibility to be responsible – and that’s what – and we take that very seriously. So we are not – when things business ebbs and flows and when it’s appropriate, we adjust. We adjust just as I said in my opening comments with those initiatives that I mentioned there. Now, to give you a little bit more color on your specifics, I’ll turn it to Robert.
Robert Stefanovich: Yes, look, in general, we certainly are working towards getting back to positive EBITDA and that, you are absolutely right, this is driven by some of the initiatives that we’re taking related to cost reduction, related to picking up on the top line revenue. So these are things that we always do. But give you maybe a few data points, just you look at Q1, and we had about eight, little over $8 million in cash burn of that, a little bit over $4 million was related to CapEx expenditures. So we are moving out some of the CapEx, as I mentioned earlier on the call, just related to initiatives that are not high priority. Certainly, we’re still making the investments in some of the key initiatives, such as intent to cryo-processing platform and other key offerings that we’ve been working on and that have partially been introduced into the market space.
As you would expect with any company, especially with company that has done a number of acquisitions, we are looking to leverage our current capabilities and current resources. So can we leverage shared services? Absolutely. Yes, we can do that. Can we fine tune the resources that we have and streamline it? Absolutely. And those are things that we have been working on over the last few months that we’ve had already started rolling out and that we expect to have an impact in Q2 towards moving us into positive EBITDA. We’re certainly very focused on maintaining a strong balance sheet, maintaining strong cash balance, and that all feeds into that equation in terms of how we look at our operational capabilities and investments.
David Larsen: Okay, that’s helpful. And then can you maybe talk a little bit about the revenue that’s being generated from BioStorage/BioServices and also IntegriCell? And any update on storing allogeneic therapies? I know obviously a third of your trials are allogeneic in nature, but in terms of storing, was that actual cell tissue? Has that started yet? Any revenue coming from that yet?
Jerrell Shelton: Mark and Robert both may have some additional comments here. They will have some additional comments, David, but IntegriCell is not a subject right now for revenue because it won’t be coming online until the last half of the year. And that will be the beginning of a ramp up. And after that you will see – over time, you will see IntegriCell producing significant revenues for the company. It’s a service that’s needed, the partnerships are coming along well, the factories are coming along well, and we have great, great anticipation of IntegriCell. In terms of a couple of the other things on BioServices in particular, Mark can better comment on BioServices and how that’s coming along.
