Jon Tanwanteng: Okay. Got it. That’s very helpful. Just one more and I will jump back in queue. What is the nature of the reductions in expenses you are looking at, are they more efficiencies, is it something else?
Mike Hajost: I think the €“ I think a number of those, again, they are kind of spread out across SG&A and R&D. And there are a lot of things that we looked at just more granularly as part of our budget process this year. We did take out some headcount. We are going to have less R&D going on as we have got more projects sort of established and we have products that we can sell and just a lot of other sort of external spends that we have now have been able to manage more effectively inside. So, less consulting, things like that. But again, we watch these costs very, very carefully. As you know, our SG&A and R&D as a percentage of our sales, remains high. We are eventually going to grow into that. But while we are doing that, it’s very important for us to continue to sharpen the pencil there as well.
Operator: Our next question is from Laurence Alexander with Jefferies. Please proceed with your question.
Kevin Estok: Hi guys. This is actually Kevin Estok on for Laurence Alexander. Thank you for taking my question. I guess my first question is, are you guys accounting for any recessionary risk, let’s say, in the back half of €˜23 and the first half of €˜24 in your outlook? And I guess what’s your view on the sort of the biggest risk to your volumes going forward or in the next few years?
Steve Croskrey: Thanks Kevin. Thanks for the question. In terms of recessionary risk, I would say that we haven’t built anything necessarily into the financial model. But it was one of the important considerations in doing this term loan. As €“ I know most of you have heard me say many times, whenever I have been asked about risk to our business, I talk about the timing of these customer launches because we really don’t have control over when those happen. We can do our thing on our end and then we have to wait for the customer. The one thing we can control that takes that risk off the table is improving our liquidity. And so that €“ with an uncertain economy out in front of us, we felt like it was important to do that now rather than wait for a moment in time, maybe when perhaps if things got really bad in the economy that we wouldn’t even be able to do that. So, that’s really why we have taken on this additional debt.
Kevin Estok: Got it. Thank you. And you actually made a reference of this already, but I just wanted to confirm, the approximate utilization rate that would make you guys breakeven at your Kentucky facility, just wanted to confirm that.
Mike Hajost: Yes. We stated this a couple of times, Kevin. And what we have said is that about a 20% capacity utilization rate would make the facility itself breakeven from an EBITDA perspective. I think gross profit, for the most part, equals EBITDA. It’s not a lot of SG&A and R&D there and then obviously, at higher levels. So, we can cover the corporate costs as well.
Kevin Estok: Great. Perfect. Thank you very much. Appreciate it.
Operator: Thank you. And our next question is from Jon Tanwanteng with CJS Securities. Please proceed with your question.
Jon Tanwanteng: Thanks for the follow-up. Can you guys just give us an update on the DOE loan program and kind of what you are expecting on the timing basis?
Steve Croskrey: Yes, sure. So, as you heard in the script, and it was in our press release as well, we just completed the Part 2 application. That was about an 8,000 page document. So, just to give you an idea of the comprehensive nature of that application. The next step on our end is to wait for a response from the DOE. But if our application is approved, then we will move on to negotiation of terms and a due diligence period. We are hopeful of seeing funding in the second half of the year. But obviously, that’s something we have to wait and see what the DOE does.
Jon Tanwanteng: Okay. Great. Well, can you use part of that, assuming you get it to pay down the high-cost debt that you have, or would that truly go to CapEx?
Steve Croskrey: No, that would just go to the CapEx for the project. There would be some management fees and licenses and things like that back to the company. But all of those details would be part of the negotiation with the Department of Energy.
Jon Tanwanteng: Okay. Is €“ are off-take agreements for the greenfield that’s mostly on hold until you get that financing? Is that safe to assume?
Steve Croskrey: Well, good question, Jon. We, of course are kind of always working on off-take agreements just in the natural course of time with customers as our relationships develop. But what we kind of determined, while we were going through this, the application process, is that we may have enough contracts and support now to get through the approval process. But as we get more detail, that would allow us to go back to customers if we needed to round out those contracts with a kind of a clear understanding of what we need out of the contract to get it across the finish line. So, prior to them coming back to DOE, coming back and proposing terms and those kind of things, we are flying a little bit blind in terms of what they might need in that respect.
Jon Tanwanteng: Got it. Okay. And then just any update on €“ the cost compete at the greenfield that’s at this stage, is that something you are still working on?
Steve Croskrey: Yes. That will €“ that number is going to probably change, depending on the timing of the project approval and all those sort of things. But we did recently bump up our estimate in our ranges. I think we brought the low end up by $15 million and the top end up by around $50 million in terms of our expected cost of that facility. So, I think we are at $515 million to $665 million now.
Jon Tanwanteng: Is that the remaining or is that the total?
Steve Croskrey: That’s the total.
