Robert Curda: It’s a year-long rental.
William Dezellem: And would it be correct to simply take $20 million divided by four quarters and it’s going to be roughly $5 million a quarter? Or are there some meaningful nuances that make that math completely off base?
Robert Curda: There’s some slight nuances that makes that math not work exactly that way. We’re going to complete delivery of the units during this quarter, as Rick said. So we’re not going to have an entire quarter of rent for that contract. It doesn’t really begin until within our first quarter ’24.
William Dezellem: And then at that point, it’s roughly $5 million per quarter going forward.
Robert Curda: Yes. I would think so, yes.
William Dezellem: Yes. Okay. And then the $9 million CapEx, how much of that is tied to this contract versus additional business that you anticipate building?
Robert Curda: The majority of it is for this contract.
William Dezellem: So if over the course of the next year, you end up with additional business that wants to ramp up prior to calendar ’25, then you would need to build additional units?
Robert Curda: That’s exactly right. We continue our diligence to ensure that this market is growing, kind of, support the additional nodes before we just go and build them. We don’t want to build something that’s just going to gather to us.
Rick Wheeler: I mean to add some color to what you’re asking, Bill, and what Robert really has answered, we’re always very cautious about making these capital investments. And so the numbers as we reported them or a static view of where we are now and forthcoming of exactly where things are. That does not mean that if business does not come to us in the future, that we won’t make any — will limit ourselves to that investment and miss the opportunity. But this is a correct snapshot of where we are today.
William Dezellem: Great. Okay. That’s helpful. So kind of using that phrase because you’re hitting what I’m looking for kind of a snapshot. Correct me if I’m not summarizing this correctly, the OBX had essentially full utilization Q3 and Q4 and Mariner will have full utilization starting in March. So my question then, if those two statements are accurate, is do you anticipate that OBX will maintain full utilization roughly with the standard disclaimers that go in with contract gaps, et cetera here in the December quarter and moving forward into the foreseeable future?
Rick Wheeler: No, we do not. That is exactly the reason we mentioned that with respect to some of the OBX equipment that’s currently in service, there will be some gaps, and those will be notable and they will change revenue in different portions of the year as those gaps occur. But we do see the overall market as remaining strong, even though those gaps will occur, that the OBXs will go back into service on those or other contracts that are being booked as we speak.
William Dezellem: Okay. That is helpful. And then if I may, I’d like to jump to a couple of quantum questions. The first one is the $2 million backlog with the emerging markets. Is that the DARPA business? Or is that something else?
Robert Curda: It’s a combination of a DARPA business and something else.
William Dezellem: Would you like to elaborate on something else?
Robert Curda: I don’t think we’ve announced the something else. It’s related to maintenance and assistance, technical assistance on some contracts we performed on in the past.
William Dezellem: Thank you. And then what opportunities, if any, do you see developing for Quantum with the situation in Gaza?
Rick Wheeler: Well, that’s yet to be seen. Clearly, there were already some track records with respect to how Israel approached some of its perimeter monitoring and all that. It didn’t necessarily work as we now understand and partly is an element of this intelligence failure that has been pronounced in some of that activity. So we’ll have to — it will remain to be seen whether that will have an impact on Quantum in the future.
William Dezellem: And Rick, that was part of my question. Was it that the equipment itself that they had did not work? Or was it that the intelligent services did not respond quickly enough. Yes, this is an equipment versus a human misstep question.
Rick Wheeler: That’s an excellent question, but unfortunately, it’s one I have no answer for.
William Dezellem: Okay. Thank you, both for the time.
Rick Wheeler: You bet, Bill.
Robert Curda: Thank you, Bill.
Operator: And we have our next question from Dennis Scannell with Rutabaga Capital.
