Craig Gates: Correct.
George Melas: Okay. And so if you have a situation where you have a $4 million increase in cost, how much of that can you recoup? I guess it’s a matter of over time, but how much do you expect to recoup of that? And how much you have to eat up?
Craig Gates: I can’t really tell you, George, because it’s — there are ongoing negotiations with many customers.
George Melas: Okay. So a quick question on the SG&A. I’m a little confused by the SG&A because it seems to have increased quite a bit. I mean it usually is higher in the fourth quarter, but I’m just trying to understand SG&A progression during the year. And it seemed like it went from the high 5s to 7 and now 7.4. So I’m just trying to understand what that is and how to think about it going forward?
Brett Larsen: Yeah, there is some costs that have gone through SG&A during this fourth quarter. We saw something similar last quarter that relative to headcount and then there’s also some year-end incentive compensation that gets accrued.
George Melas: Okay. So what would be a good number for the first half of fiscal ’24?
Brett Larsen: I would — I don’t know that we get that finite in our projections. I would assume something fairly flat to what we did last year.
George Melas: Okay. But last year was meaningful. Last year, it was like $6 million in SG&A.
Brett Larsen: Yeah. You are comparing — so you’re comparing quarter-to-quarter?
George Melas: Yeah, I’m comparing…
Brett Larsen: No, I’m saying — yeah, I’m saying in total.
George Melas: In total for the whole year?
Brett Larsen: Yes, correct.
George Melas: Okay. Okay, great. Thank you. Got it. Okay, great. I’ll get back in the queue. Thanks a lot.
Craig Gates: Yep, bye.
Operator: Our next question comes from the line of Bill Dezellem with Tieton Capital. Please go ahead.
Bill Dezellem: Thank you. I’d like to pick up on Vietnam again. So if it’s approximately 50% utilized, is there anything about that plant that would not make the normal phenomenon where the last half of utilization is far more profitable than the first half? Is there anything about that that’s not accurate for this facility?
Craig Gates: No.
Bill Dezellem: And what is your — what’s your current prognosis in terms of filling that plant or bringing additional business on? Is the pipeline reasonably high confidence that you are going to be filling that quickly? Or talk to us a little bit about that, if you would, please.
Craig Gates: Well, I’m confident that a year, 1.5 years from now, it should be filling up nicely. In between there, you never know if you’re going to win a $10 million piece of business or a bunch of ones and it’s going to take a while. So I can’t really help you with the granularity with really what you want to know as far as how much by when. But it’s not — we are not in a case where next quarter, we’re going to say that, oh, we just put another $15 million in there because we won a piece of business. So it’s a ways further out than that.
Bill Dezellem: That’s helpful, Craig. Thank you. And then last quarter, you said that your revenues were going to be down sequentially because of the seasonality of one customer that had a lot of revenue in fiscal Q3. It turns out revenues were nearly flat. Would you please discuss how you made up that meaningful decline in volume?
Craig Gates: Well, during the year, we have continued to win a lot of programs. And as we talked, I was hoping that we would be able to grow through what we saw as an upcoming slowdown, a recession and also grow through the seasonality of one of the big programs, and we have seen significant growth out of our US operations, and that has been part of what offset the decline that we are expecting. We also didn’t see as much of a decline in Q4 as we were fearing due to recession. And we also saw some customers, existing customers our Juarez bump up their demand, and we were able to meet it with parts. So all three of those came together to help offset the slowdown in the seasonal product and the fact that we’re still able to run in the numbers we gave you for Q1 without any of that seasonal product continues to show what’s happening mainly in the US space and partly in Juarez.
As we talked, we’ve seen a number of our largest customers begin to forecast a slowdown due to the economy. So we are in this quarter’s projections, we actually included those forecasted slowdowns from the big customers. So I don’t know how much worse it’s going to get. We’re still probably less than 50% of our big customers pushing out, but if I knew the answer to that, I’d be Jamie Dimon.
Bill Dezellem: Okay. I’m going to ask you to be Jamie for a moment here. So I just saw today that the Atlanta Fed’s GDPNow cast — is forecasting a 5% GDP in the Q3 and that quantitative metric has actually been pretty accurate in the recent quarters, and it’s been an uptrend for the Q3. So would you — what insights would you have relative to what you’re seeing from your customers, whether it be the type of products or any other thread you might be able to pull through what you’re seeing relative to that quantitative metric that’s indicating economy is holding up?
