Daniel Jones: I think it’s both, right? I think anything that we can invest in to improve our service model and that could be vertical integration, it could be distribution, it could be modernization of facilities. We’ve talked regularly, and that’s what keeps the supply chain broken today is the access to skilled labor that’s not coming back, right? And so to the extent you can get efficiencies with regard to certain of your facilities that can help with that process, it’s going to be all of that, really, as you go through it. And that’s the tough part, because when you’re analyzing an investment, how you would analyze an investment like a service center, it’s going to be a lot different than a new plant or an expanded facility or even the XLPE facility, right?
And so some take costs out of the system, some improve very directly your service model. I’d argue they all improve your service model. And that’s really our baseline for investing is, does that improve our service model? And that could be capacity, efficiency or cost.
Julio Romero: That’s great color. And thanks for pointing out the service center, because I remember how that kind of added to the service prop there. Appreciate you guys taking the questions. Thanks.
Daniel Jones: Thanks, Julio. Good work, Julio.
Operator: Ulrich Voss with [indiscernible] your line is open.
Unidentified Analyst: Thank you very much. Congratulations to another great quarter. I have four questions, I think. The new facility, what revenue do you expect from the new facility going forward next year? The second question would be regarding cash management. How do you invest about $580 million in cash right now? Are they in treasuries? What is the projected interest income from that? And did you do any buybacks in Q4 so far?
Bret Eckert: Okay, perfect. I think I got three. Was there a fourth one?
Unidentified Analyst: Yes, that’s coming later on. It’s too much otherwise.
Bret Eckert: Okay, perfect. So on the revenue with regard to the XLPE facility, we’re not selling any of the off-take or any of the off put from that facility. We’re only using that for our own purposes. All right. And so it’s really more of a cost initiative as you go through that. We talked about all the uses of the cross-link polymer insulation that was one part of the supply chain we didn’t like the risk profile of as much as some of the others during the pandemic, mainly because there was a governor in place and that a lot of folks were put on quotas as to how much you could actually get. We were able to double the number of trucks coming in here monthly in the middle of the pandemic. But we still didn’t have all the insulation, cross-link poly insulation that I would like to have had.
And so by building your own facility, right, you take the risk out of that, right. You’ve got the ability to grow that as much as you see fit. And then ultimately, once it’s optimized, and that’s going to take nine months to twelve months to really fully optimize that facility. That’s where you’ll see the cost reduction. On the cash management side, we ended the quarter with $582 million. We continue from a use of cash standpoint focused on share buybacks and capital expenditures. And that’s been consistent as we talked about since February of 2020. If you look at the cash balance, that went from about $731 million at the end of December to the $582 million at the end of September. Cash went down $146 million. During that same period, we spent $375 million in share buybacks and roughly $120 million in CapEx. So despite spending $495 million, cash only went down $146 million.
And so the reauthorization, the authorization back to a full 2 million shares in June, which you have a little over 1.1 million, 1.2 million remaining, shows the Board’s confidence in continuing those repurchases. We do invest our cash in overnight in short-term securities, off balance sheet for any banks, but we do keep it fairly liquid.
Unidentified Analyst: Interest [indiscernible].
Bret Eckert: And listen, interest income, that’s the great side of interest rates to be on when you have cash. And so the interest rate increase has obviously been contributing. You’ve been running probably $3 million to $3.5 million a month, or $9 million to $10 million a quarter in interest income with the cash balance you’ve seen. As the cash balance comes down, hold interest rates steady or they go up. I think it’s easily a $25 million to $35 million number on an annual basis, depending on what the cash balance is. I really can’t comment on buybacks post third quarter.
Unidentified Analyst: Okay. But it might fair to assume that the run rate is kept up like the quarters before.
Bret Eckert: Well, I mean, you can look at the last three quarters and we purchased right around 700,000 to 775,000 each quarter, right. And ironically, the amount is almost identical. That was not by design. Someone asked me that a couple of weeks back. But it’s always been in that $110 million, $125 million kind of range. And so you saw the increase authorization. And so I guess you can take from that pattern what you want.
Unidentified Analyst: Yes. And the last – the fourth question, do you know who is short, I wonder, because it’s almost 4.2 million shares. I mean, you’re one of the most shorted companies. And I wonder if there might be a trade going on because you are so cheap to borrow with a meager dividend. And I wonder if there are some fancy hedge funds borrowing the stock really cheap and put that money into treasuries for 5%. Do you know who’s short and why?
Bret Eckert: I don’t – I mean, I don’t know who’s short. And it seems like everyone always if you talk to someone, they always know someone that is it’s not them. Whenever you experience rapid period of success in a short period of time, you’re going to attract a certain type of investor who wants that volatility and that’s all they want. They just want the volatility. We’ve seen some frequent price swings that are pretty wide relatives of the broader market. And so that obviously keeps that interest there. We’ve been very clear in our belief that margins would gradually abate and that our results would normalize whatever the new normal is, right. And so as you tell that story, the bears and the bulls use the parts of the stories they want to tell, right?
