John Bair : Great. Are there any new regulations in that area that might drive some of that need to spend capital by these companies?
Dan Thoren: Not that I’ve seen, John. The thing that I have seen is some of these companies basically coming out and saying, look, we’ve got to have these refineries running for decades more. I mean, the transition to clean energy isn’t going to be as fast as everybody is saying. And so we’ve got to keep these plants running, and and the cost of some of the alternative energy isn’t low enough for us to make a wholesale transition to. And frankly, the infrastructure isn’t in place. So we’re just — we’re starting to hear, and I think you’re probably starting to hear that also that people are walking back their projections for when they’re carbon neutral. So we’re just kind of following along and figuring out how to support both the existing oil and gas business as well as the new energy business. And in transitioning as it makes sense to transition.
Operator: Our next question comes from the line of Bill Baldwin with Baldwin Anthony Securities.
Bill Baldwin : Chris, can you update us on the implementation time frame on ERP and what to project the cost of that implementation will be?
Chris Thome: Sure. So we’ve said it’s going to be about a 12- to 18-month process. We’re taking our time and being very diligent about the way we’re going through implementation. Quite frankly, I’ve been through a number of implementations at several companies, and we are being very thought in the fact that we’re bringing on an extra consultant to kind of help us through and make sure that we stay on track and project manage and to make sure that we really design the ERP system to optimize and get the most benefit from it. So we think it’s about a 12- to 18-month project, which we’re just kind of getting started here. We think in total, it’s going to cost about $3 million, $2 million of which will be CapEx and then about $1 million in expense, which will be over this current fiscal year and next fiscal year.
Bill Baldwin : It sounds like you got your arm drone that one pretty good, and that’s good. That’s good. Remind me, Chris, if — what’s the total liability, if you will, of the company on the performance bonuses to the BN folks based on that deal you made with? 3 years, right, okay?
Chris Thome: So it’s a 3-year program, a potential of $2 million to $4 million per year, and that starts with fiscal year ’24. So we’re going to be — we’re going to have this for fiscal year ’24, ’25 and ’26. And each year it could be anywhere from $2 million to $4 million payout. So anywhere from $6 million to $12 million, which is lower than the original earn-out that was signed when the deal was made of $7 million to $14 million and it has certain EBITDA targets that have to get hit in order to achieve the $2 million to $4 million per year, and it progressively gets higher and higher, right? So for this year, it’s $8.75 million of EBITDA for next year, $9.5 million of EBITDA and then the following year, $10.5 million on EBITDA. So significant growth to go along with those payments.
Bill Baldwin : Is that adjusted EBITDA that you’re using there just — or just regular?
Chris Thome: So certainly, we would adjust out certain onetime things or things like that. But for the most part, that’s straight — for all intents and purposes, it’s straight EBITDA.
Bill Baldwin : Okay. Okay. So we’ll be seeing these bonus payments in pretty much quarterly. Is that correct throughout the next 2.5 to 3 years?
Chris Thome: Correct.
Bill Baldwin : Okay. What kind of visibility do you have on your aftermarket business with the refining companies, refining petrochemicals? Do you have some fairly decent visibility there? Or is that pretty short term?
Dan Thoren: It’s actually very short term, Bill. So that’s pretty quick to fill. So we’re looking 2 to 4 months typically for filling those orders. And so we don’t have a lot of visibility for what it will be in 6 months, for instance.
Bill Baldwin : Right. Had the orders held up pretty good so far, then as we get into Q3?
Dan Thoren: Yes, absolutely. They’re holding up nice and strong. Yes.
