Jana Croom: Okay. So primarily, it was related to the EV market. As I said before, though, the concern was we are still evaluating the UAW strike and what we might hear from the Tier 1 in terms of how they’re evaluating the impact of that. So we sort of tapped on what we thought was a good placeholder for that impact, and that would be broad, so related to both combustion engine and the EV market. And then as the year pace is out, will give you more color to help you understand the actual and how they ship out.
Hendi Susanto: Yes. And then second question, Jana. So I think with the slowdown in EV, does it affect your charging station business and whether you can share some color like how much the impact may be qualitatively?
Jana Croom: Yeah, that’s a great question. Here’s the thing, you already had the robust EV adoption across the globe and charging stations, particularly the Supercharger stations that you’re going to see in place at gas stations that you’re going to see in plants that supermarket shopping centers, et cetera, needed to catch up to the demand. And so while you might see some opening, there was a lot of work to be done in terms of growth there to support the last five years arguably of growth in the EV car market. And so we still feel really good about EV charging as a growth opportunity for Kimball going forward. And we’ll continue to give you updates and see how it goes. But the funnel for that opportunity is very robust.
Ric Phillips: I think as speak – saw earlier — I think as we shared earlier, but today, it’s a relatively small part of that segment for us. But as Jana said, we do — we are optimistic about the long-term growth for sure.
Hendi Susanto: Okay. Got it. Yes. And then Jana, Ric, I think, let’s say, despite of the slowdown in automotive market. Can we reasonably assume that you are partially offsetting that with the increase in the dollar content?
Jana Croom: So in some cases, some of our contracts are balanced volume and pricing. In some cases, they are not. And so it really becomes incumbent upon us not to say, hey, we’re going to get an increased pace price but to say, hey, how do we control the OpEx expense associated with the temporary interruption. And so — it’s a partnership with your customers that you have, but a lot of it is uncommon upon you with the company. Is that to control your cost?
Ric Phillips: And Hendi, it’s Ric. I just want to clarify your question because I think you mentioned electronic content is – yes. Okay. So I think the — in addition to that, we still see strongly electronic content increasing in auto. And so your question is, do we still think that the — our participation in the electronic content will outpace unit growth of vehicles, yes. I think that trend is just as true as we’ve seen it in the past.
Hendi Susanto: Okay. Got it. And Jana, you mentioned about potential discussions with customers in terms of managing costs. Some companies discuss a win-win strategy for both parties’ customers and then their companies as a supplier. Could you — yeah, so could you give more color what are the options that — when you negotiate for the long-term supply agreement and then dealing with post out whether you can negotiate certain incentives?
Jana Croom: So negotiations with customers are always happening. Looking at that basically all of the time since we are in here, we are negotiating with customers. And so I don’t want you to think of negotiations at point in time. The other thing that I would offer is this environment if not unlike the EMS environment has always been which is what is the partnership with your customers around price and volume? What’s the partnership with your customers around capital deployment and required return on that? What is the partnership with the customers around the automation and innovation and efficiency that they expect from you? So in that respect, nothing has changed, right? This is EMS. What I will say has changed based upon — and again, I’m sort of three years into the EMS business.
But if you talk to our CCO and our COO, who has been doing this collectively, combined over 50 years, they’ll say the auto are better customers, because they understand that you have to keep your suppliers healthy. And you don’t have sort of the race to the bottom and commoditization of the business that you saw before. And so in that respect, absolute normal is win-win, right? It can’t go beat your suppliers up to try and laying out cost of the system, because they just have some very weak suppliers that can’t deliver to you the quality products that you need. The other thing that I will say is we explicitly decided where we wanted to play in the Auto’s market, staying away from some areas that do commoditize quickly to add additional protections against that.
Operator: Thank you. [Operator Instructions] Our next question today comes from Mac Furst from Singular. Mac, your line is open. Please go ahead.
Mac Furst: Yeah. So this is Mac Furs, Singular Research. Good morning, Ric, Jana and Andy. The durations on the quarter…
Jana Croom: Good morning, Ric, Jana, Andy. Correlations on the quarter. I mean revenue is still up despite the loss of that $100 million contract in the Medical vertical that we spoke about last quarter. I have two questions about automotive. You spoke about the additional revenue opportunity with ZF. Can you give us some color? Can you attach a revenue estimate on an annual basis for that additional business that you’re trying to do with ZF starting in 2025?
Ric Phillips: Well, I would love to, but that’s — I was — we had a great meeting, by the way, as I mentioned in the prepared remarks and great customer and partnership with us, but we’re not able to disclose that
Mac Furst: Okay.
Ric Phillips: It’s meaningful — it’s meaningful for us. long term.
Mac Furst: Okay. Okay. Can we, for a second, talk about the ripple effects that you expect in the next couple of quarters about the after FA UAW strike. If I were to throw out a certain number, say, revenue impact of, say, $30 million, $40 million or $50 million over the next three, four quarters, is that something that is too high? Or is that a number that’s too low?
Jana Croom: The guide that we provided is based on the information that we have right now, and tended to be holistic for the remainder of the year, right? So $100 million down roughly versus the midpoint of our guidance range, with fairly evenly between automotive and industrial, automotive focused more heavily in the North American market. So that would indicate that over the three remaining quarters at $50 million in total for the full fiscal.
Mac Furst: Okay. So maybe revenue down by $50 million over the next three quarters. Okay.
Jana Croom: Yes.
Mac Furst: Thank you. Thank you very much.
Ric Phillips: Thank you.
Operator: We currently have no questions on the line sir.
Ric Phillips: Thanks, Mac.
Operator: We currently have no further questions on the line. So I’d like to close the call here, and thank you all for your participation. If you would like to access the replay, you can do this by dialing +1866-813-9403 and use access code 264925. Replay instructions will also be available on the Kimball Electronics Investor Relations page. Thank you all again for joining today’s call. You may now disconnect your lines, and have a great rest of your day.
