Tania Almond: Nathan, I think this is another area that we’ve gotten a lot of feedback from everyone on the call. And I think we want to be cautious about trying to set a very specific expectation around any one customer and the deal, right? But I think what we’ll kind of add just at a high level is, we’ve been very encouraged by the number of end markets that we’re seeing increasing interest from related to system sales and potential conversations. And even — I know we’ve talked about kind of commercial food service. We’ve talked about ag, we’ve talked about construction, industrial. There’s even some expanded areas like white goods. Think about things like laundry, dishwashing, things like that, that — since there’s just more and more opportunities that seem to be popping up on the radar.
I think there’s a lot of opportunities for 2025 and beyond product cycles. And I think we want to stay focused on just keeping our nose to the grindstone, executing and then as soon as we get any of these across the finish line, we’ll obviously let everybody know.
Nathan Jones: Fair enough. Thanks for taking my questions.
Tania Almond: Thanks, Nathan.
Josef Matosevic: Thanks, Nathan.
Operator: Our next question comes from the line of Mig Dobre with Baird. Please proceed with your question.
Mircea Dobre: Yes. Good morning. Just a follow-up on the conversation with Nathan on the system sales point. you left it out of guidance for ’24. But since you’re calling it out specifically as being left out of guidance, are we to sort of understand that there is a better than zero chance that you could actually have some benefit in 2024 from these system sales? Or is this more of a 2025 or 2026 potential benefit I guess we’re all asking the same question, trying to understand what the sales cycle would look like for these system sales.
Josef Matosevic: Yes. Good morning, Mig, I think you’re opening with better than the zero chance you are pretty accurate. Like Tania said, I want to reiterate there is and continues to be very heavy lifting on the subsystem and on the recurring revenue model that we have been communicating. We want to be good stewards here and get the feedback from our investors and analysts and the path continues. And we will communicate it as we get it through the finish line and have our production schedules fully identified and are actually able and capable to communicate the exact timing and volume.
Sean Bagan: Hi, Mig. Its’ Sean. I just wanted to give you a different lens too from my finance accounting perspective that ultimately, we’re not in control when an OEM is going to place an order with us. But my leading indicator as to when and how soon we will get a system sale is ultimately driven by the conversations and discussions we have and ultimately, engineering service agreements we have. And so those commitments that OEMs are making to us, and we’re codeveloping features, products with them. Would tell me they’re not going to commit to those dollars and services agreements that we have in place and we’ve been working on. So it’s not a matter of if these are going to come, it’s when. And it’s just — we’re ultimately not in control replacing that purchase order and getting it over the finish line. But there is a lot of activity and a lot of efforts throughout the entire Helios family of companies working on these. And so very confident they will come through.
Mircea Dobre: Sure. I guess, at least my challenge in thinking through this opportunity is that if I’m thinking of white goods or commercial food service versus agriculture equipment, just the product cycles are different and how you would end up being stepped in as the solution provider would look different. So that’s what I think we’re all kind of trying to think through and figure out in terms of what the time line might look like. But I appreciate your comment. I guess one follow-up on Balboa or health and wellness as an end market. Can you maybe frame for us what 2023 look like from a revenue standpoint in this vertical? My recollection is that Balboa prior to COVID was a business that was running right around $90 million or thereabout of revenue. Is this where this business reverted back in 2023? And what sort of visibility do you have here in terms of the recovery? Does this recovery have legs? And do you have visibility into that in ’24?
Josef Matosevic: Yes. So 2023, Mig, was around the $100 million watermark. 2024, we are seeing encouraging signs. Obviously, as Sean mentioned, we have a couple of months now in the bag in Q1 and the trend continues to be positive at this point. So Sean, I don’t know if you want to comment anymore on 2024.
Sean Bagan: Yes. Well, I would say the only other data point I’d highlight is we’re not recovering back to the pre-pandemic levels within our guidance. So we expect there’s still more than one year of market recovery, not to mention some of the new products that we’re bringing to market that we think will continue to drive the incremental growth, both what we’ve announced and what we have coming this year. So certainly, as we look at our capital implied guidance within the segments, more of the Electronics growth will be coming from Balboa than it will be innovation in 2024.
Tania Almond: And Mig, the only other thing I’d add, just from a total Electronics segment perspective, the piece that doesn’t really get disclosed externally is we’ve been moving a lot of operations, different product lines, wire harnessing, things like that from Tulsa to the Mexico location. And so it’s really starting to run internally, operationally more and more as a total segment, and that’s how we really think about it internally versus kind of breaking it out at kind of the separate company level. And so that’s part of when we talk about the Center of Excellence and operational efficiencies and improvements in different areas of the lever that we’re going to see in 2024 and beyond.
