Tony Rabb: Yes. So we are fully transitioned into standard inventory accounting this quarter. So that’s good news. And we’re extremely happy to have transitioned out. And as part of that transition, we’re going to have to deal with a couple of components of transitioning into it. Number one is that we do have inventory that was previously expensed, obviously, and some of that inventory will take a little bit of time to work through. It doesn’t all get worked through in one quarter. But more importantly, I think the thing to recognize is that we have to make an adjustment to our inventory where we’re basically adjusting it down to lower of cost or net realizable value, which is the same accounting that all companies in standard inventory accounting have to deal with.
But companies that are scaling up, like ours and other energy storage companies and other EV companies are all dealing with this as they’re scaling up and their manufacturing volumes are low relative to the amount of overhead that they have. And so until we’ve got a lot of capacity in the facility today, we’ve got 800 megawatts hours of annual production capacity. We’re operating well below that. So the fixed overheads that we have — that you have to apply into inventory against the number — low number of units that we’re producing, that’s going to continue to be a headwind. We’ll be making this LCNRV adjustment until we start to get up closer to our full manufacturing capacity. The other component that we’ve described previously is that we anticipate on energy warehouses getting to what we call adjusted gross margin, or non-GAAP gross margin breakeven, but not until the second half of 2024.
And at that point is when we’ll actually start scaling up, because that’s when your selling price is above your direct cost, and that’s when you want to start ramping up your volumes to start covering all of those overheads. So both of those components are going to impact this LCNRV valuation. And we anticipate that on a per unit basis, it will start coming down over time. However, as we start producing more units as we scale up, the absolute dollar value will be increasing until we get to the point where we can really start scaling the business up. So it is going to be a material for us going forward.
Thomas Boyes: Yes. Appreciate the insights there. And then, maybe just obviously great to see the progress on the energy center front, can you just remind me kind of what the timeframe is in general terms to deliver on a project of that scale? If, say, production starts in 4Q of this year, is that a late 2024 event? Is that more early 2025?
Eric Dresselhuys: Yes. Thanks. I’ll take that, Thomas, Eric here. So the first units that are being built here in being built for our project with Portland General, which are here in Oregon. So those are actually coming right off of the manufacturing floor and onto the job site. We kind of view that as the pre-commercial units that we’ve done in collaboration with Portland General. And then we’ll start shipping through commercial units in the second half of 2024. So it will have a 2024 impact and then ramp up further as we get into 2025.
Operator: Thank you for your question. This concludes today’s conference call. You may now disconnect your lines.
