Dan Thoren: You end up kind of seeing some weirdness around some of the specialty materials like baskets or for instance. And so, specialty fastener companies are struggling quite a bit. They end up being high tolerance, high — in some cases, high strength, high compliance types of components, and people are struggling with those. And so it’s kind of weird, Bill. We see raw material, the pricing being a whole lot more stable, a little bit longer in lead times, but then you get into components that we’re trying to buy, and every once in a while you just run into something is like, okay, can’t buy that and can’t get that in-house for 6 months. And people’s inventory has not built up very well yet. So we’re still running into challenges and supply chain and deliveries.
Chris Thome: But as you know, Bill, none of these challenges are unique to us, its everyone that’s experiencing.
Bill Baldwin: Right. Right. Regarding the lumpiness of your cash flow, look like your unbilled revenues were pretty large. When that — as you clicked on those revenues, what that offset quite a bit to your customer deposit situation. Because your deposits were a big source of revenue, unbilled revenues were kind of a drain on you.
Chris Thome: Yes, absolutely.
Bill Baldwin: So does that kind of balance out over time, serve your cash flow?
Chris Thome: Yes, we think we have some upside on the unbilled levels as you astutely pointed out. That’s been one of the areas of focus of mine as well as the team’s, ever since I started and we think that’s going to start to free up over the course of this year, and will definitely be a positive cash generator for us.
Bill Baldwin: Very good.
Chris Thome: As far as our cash flow, so given the size of these contracts and these customer deposits and the changes in the unbilled revenue, we do expect our cash flows to be very lumpy, but over time, I think if you take a look at our EBITDA level, that’s more reflective of the cash that we’re generating. It just is very lumpy in nature. Over time, we’ll be improving and increasing.
Bill Baldwin: And lastly, can you wrap any potential numbers around the turn out [ph] liability post 2024?
Chris Thome: Sure.
Bill Baldwin: Is there a cap on that? I know you announced something on that quite a while back …
Chris Thome: [Multiple speakers] publicly released, so we can certainly talk about it.
Bill Baldwin: I couldn’t locate it. So …
Chris Thome: That’s okay. Yes, no problem, let me walk you through it. So it’s a 3-year program starting in our fiscal ’24. So fiscal ’24, ’25, ’26, the threshold level is $2 million and up to a max of $4 million each year. So over the 3-year period, a max $6 million to $12 million in potential additional payouts in addition to the normal employee bonuses. And this was all negotiated shortly after the acquisition is all [multiple speakers].
Bill Baldwin: Right. I remember that. I remember that, yes. I just [indiscernible] find the detailed one.
Chris Thome: [Indiscernible], markets right. There’s a growing EBITDA target. So for fiscal 2024, the target is $8.75 million and then that goes up to $9.5 million for fiscal ’25 and $10.5 million for fiscal ’26. So even though it is going to be a higher expense, we’re going to get it — we’re going to see a higher EBITDA level that goes along with it. So it’s all performance based.
Bill Baldwin: Okay. That’s what I was looking for. Well, you fellows and your team are doing a heck of a job in building the company here. So congratulations, and best of success.
Dan Thoren: Thank you, Bill.
Chris Thome: Thanks, Bill.
Operator: Our next question comes from the line of Gary Schwab with Valley Forge Capital Management. Please proceed with your question.
