Craig Ellis: Got it. And then, Tom, so it sounds like with a few millions of GEO in the outlook. You’re just counting on a couple of weeks at most and then you would go to a full quarter obviously in 2Q.
Tom Schiller: That’s right.
Craig Ellis: And this business do you think it sustains the pacing that it had last year as we go through 2023 and 2024?
Tom Schiller: We do, we see — actually in fact more than anything else, we see enormous top-line synergy opportunity here. Donald mentioned the cross selling opportunities are fairly enormous. So those conversations have already started. So we could see some benefit from that even in the back half of this year. That’s not contemplated in the guidance we put forth last week in terms of expecting to see at least $40 million incrementally from GEO this year. And then of course that sets the stage thereafter for ’24 and ’25.
Craig Ellis: Yes. Got it. And if I could sneak in one last one. Tom, just any color on what drove the gross margin upside in the fourth quarter.
Tom Schiller: It was a nice combination of things. Our mix just continues to improve, new program ramps layering in, scale is of course a big dynamic here, and then in general, the supply chain is loosening up a little bit. And so that was also helpful. So all of those dynamics are contributing to — have certainly contributed of late to the gross margin expansion we demonstrated and we see that continuing — those very dynamics continuing on our way to 60%.
Craig Ellis: Congratulations on all the progress, guys. Great momentum.
Donald McClymont: Thanks, Craig.
Operator: And our next question comes from the line of Cody Acree with Benchmark. Please proceed with your question.
Cody Acree: Yes, thank you and let me add my congratulations to the Group. Did you talk, Tom, about your backlog, give a number. I had to step off the call for just a second, but did you give an absolute backlog increase?
Tom Schiller: Not this cycle. Stay tuned on that. We generally provide that in the November conference call. Well along the way, of course, we’ll provide program wins and updates and such, but we want to make that an annual event.
Cody Acree: Did that number increase sequentially?
Tom Schiller: We just haven’t — we’ve won some programs certainly since November, but we just haven’t publicly size them yet.
Cody Acree: Okay. Great. And then one for GEO. What is the contribution margin that you’re expecting in the near term? And then how does that grow the contribution?
Tom Schiller: You’re saying the incremental contribution margins?
Cody Acree: Yes. What is, what is GEO’s a base gross margin increase that additive or dilutive to what you’ve gotten to it.
Tom Schiller: Sure, sure. So initially in the current quarter it slightly dilutive below our average, but will take some steps and fairly quickly here to get their margins at parity with our expansion. And then thereafter, in fact, I think when we move to ’24 and ’25, it’s actually enhancing our gross margin. And a lot of that candidly is they’ve just been subscale and we’ve got some supply chain relationships we can work there to bring their margins more in line with us. This is one I was going to add, this is the one quarter given that between the announcement and closing, we’re not going to have that much time to really implement the synergies. Those really come into focus in the back half of this year.
