Jugal Vijayvargiya: Yes. And Mike to add to that, if you look at our Q2 and Q3 results, we were on 17%, 18% EBITDA margins in the Q2, Q3 time frame, certainly a Q4, we had the impact of the one-time items that Shelly mentioned, but also there was a significant impact based on the mix for memory devices. And you know, what’s happened to the memory side, particularly in the last year. And so, that was a mix hit for us. But we would expect and we see this I think happening during the year as Shelly indicated that those one-time items are behind us and we would expect continued progression back towards the Q2, Q3 type margins and then pushing those forward after that.
Mike Harrison: All right. And then last one for me is you called out $5.6 million worth of startup costs and scrap costs for the second phase of this precision clad strip project. Is that all the startup costs or is that just a portion that you guys considered unusual? I guess I’m just looking for a little more clarity on how we should be modeling those startup costs through late 2024 if you could provide some more detail there?
Shelly Chadwick: Yes. Sure. Thanks. Thanks for that. If you probably know, when we were working through the initial phases of the ramp of the clad strip facility, we did not specialed out any of those ramp costs. We, we took them to the P&L and we discussed and disclosed what they were. Once we were at kind of full run rate in that facility, and we had some process tweaks and some formulation tweaks that we were working on with the customer, we did incur some additional charges that we would assume are, or we would call unusual. And we didn’t want that to mask the performance of the business. So we called them out and we special those charges in ’22. Similarly, we’re doing a little of that again, and we did that in a Q4 where we had some process runs and things that were for qualifications that needed to be scrapped.
And so a lot of it is there. In addition to some resources that we’ve brought in just to make sure the ramp goes well. So now that we’re really fully running, we don’t want to have the business results skewed by up and down on the startup costs. So if we have unusual costs, we will continue to special them so that you don’t have to worry about, hey, is that margin going to come down, come up during the year.
Mike Harrison: So I guess as we’re thinking about the performance materials business on an adjusted basis going forward, we should assume that there’s not startup costs in there, that those are going to be specialed out? Or are there still going to be some, some headwinds, I guess as that’s ramping on an adjusted basis?
Shelly Chadwick: Yes. On an adjusted basis, you should assume that those will be specialed out. And you know, as we’ve talked about the ramp of that will start late in ’24 of the sales related to that.
Mike Harrison: Right. Right, understood. Okay. Thank you very much for all the help.
Shelly Chadwick: Sure.
Jugal Vijayvargiya: Thanks, Mike.
Operator: Thank you. The next question is coming from David Silver from CL King. David, your line is live.
David Silver: Okay. Thank you. Good morning.
Jugal Vijayvargiya: Good morning David.
David Silver: Yes. I apologize if I’m going to make you repeat yourself, but I wanted to maybe just talk about the softness on the electronic materials side initially. So correct me if I’m wrong, but I think maybe last quarter or so Jugal, I think your commentary was the fourth quarter we would see an inflection point or reach an inflection point at some point in the fourth quarter on the electronic material side. And I think the tone of it and I guess the stabilization that you had been maybe indicating got pushed out to the right a little bit. I know there’s a number of issues that have been pressuring that group for, for many quarters, but was there something in particular that maybe has led you to delay maybe the upturned — your expectations of an upturn in that group, maybe by two, three quarters?
Jugal Vijayvargiya: Yes. David, if we actually go back a couple of quarters, I do, you highlight a fourth quarter. I think the world was thinking and we were thinking that this market, semi market was going to bottom out in Q2 and start to see an uptake in Q3. And then as we noticed from all the major semi companies, the recovery got a bit delayed, a bit delayed, a bit delayed, and now the most recent information is that Q1 is expected to be the low point and then slight recovery in Q2, but then really more of the recovery happening in the back up of this year. So — and that’s just a combination of the usage around the world as well as the inventory de-stocking that was happening at all of the semi companies. So, I think that clearly impacts us as we are a key supplier into that value chain.
The recovery for us will be slightly later than what the semi companies will recover, just based on the cycle and kind of where we fit in the value chain, but we’ll follow that recovery as it happens. So, I think really it’s a very much associated with sort of the market dynamics and what we’ve been — what we were hearing from the various semi producers. The one item that was more specific I think to us, which again is a market dependent item is the memory mix issue that I mentioned where we did have some specific product portfolio, which we count on every quarter and we had a significant drop just based on inventory correction that our customers are going through. And as a result, that created a heavy negative mix for us for the quarter. But we would expect that to start to recover in Q1 and into Q2 and so on.
