Justin Bergner: As you think about the revised EBITDA guidance for the current fiscal year, beyond the delays from your major energy storage customer, what are the other puts and takes to think about?
Joe Bartolacci: In terms of how comfortable we are Justin? Help me understand the question a little better.
Justin Bergner: Just parts of the business that are looking a little bit better than they were at the start of the fiscal year and parts of the business that were looking a little bit more challenged outside of the delays from the major energy storage customer.
Joe Bartolacci: I would tell you, my summary comments are pretty consistent with that. Memorialization is performing much better than we had maybe initially expected for the year. There’s a lot of unknowns when you start a year, especially on the demand side of that business. And we obviously think we picked up some market share, and that’s performing well, and the new recent wins should help us as well. SGK as well is performing well. We expect that to continue to be the case. You could have a quarter that’s going to change. But at the end of the day we think that that is a sustainable business that this year will be a contributor to our results. Product identification is well, performing very well. There is a new team in place over there, and they are performing very well and getting ready for the new launch should only make that business a bigger contributor as we go forward.
Warehouse is challenged. I mean it’s not – I mean it’s making money. This is not a question of whether it’s profitable or not, it’s a question of what we would have expected going into the year. If you look into the automated warehouse marketplace, you’ll see our competitors who are much more public about it, struggling as well. I mean these numbers could be off 20%, 30% on the top line. We’re consistent with that. But we think that turns. I think that’s a large capital spend. We’ve seen a number of our clients pull back on contracts because of the size of the capital spend and maybe the interest rate environment might be impacting that as well. So warehouse has been a little bit of a challenge in going forward. I think I’ve covered just about all the businesses other than energy at that point.
Justin Bergner: Okay. Great, that’s very helpful. On the energy side, you mentioned in the press release benefit of orders from multiple customers. As the broader set of potential customers are able to kind of order production equipment more flexibly looking into later 2024 and early 2025, is that kind of really opening up the spigot for orders? And is that driving this likely $40 million CapEx investment to standardize or serialize the manufacturing equipment?
Joe Bartolacci: Yes. So I would – as it relates to the development cycle, to help you understand, you go from, what I would call, preproduction machine, to a production prototype, to a production machine, that is a multi-quarter process at a minimum. So, what we’re doing is with the investment, taking one of those turns out, that prototype machine as well as a lot of the testing that is done from the product that comes off the manufacturing. So, right now the orders that we’re seeing, I would say, would be on the smaller side. They’re beyond just a, what I would call, a lab machine. We’re trying to take you from concept directly to production equipment with our investment, and that should shorten that cycle significantly.
Justin Bergner: Okay, fantastic. But I guess the other part of my question was, I think, there was some intellectual property, I guess, issues that might have hindered the ability of some of your potential customers in the energy storage side to order production equipment that’s probably rolling off. Is that accelerated for customer interest in the present time?
Joe Bartolacci: Yes. Now I understand your question. Yes, there are patents that are held on dry battery electrode products that expires here in July. So, the acceleration of interest and the, what I’d call, the interest in investing has accelerated because of that. No question about that. And we are trying to facilitate that with our investment.
Justin Bergner: Great, thanks so much.
Joe Bartolacci: Sure.
Operator: Our next question comes from the line of Nick Ripostella with NR Management. Please proceed with your question.
Nick Ripostella: Good morning. This is more of a big picture question. All the investments you’ve made in these other businesses outside of Memorialization how have they really benefited shareholders if you look at the stock price? So, at any point would you change the strategy and split up the businesses, because shareholders really have not benefited for a long time from businesses being together.
Joe Bartolacci: Yes, I understand your question. We have had – we’ve been fairly public with the commentary. Our hope is to continue to build these smaller businesses to a scale and then to begin to look at the strategy of what the business looks like going forward. As a couple of these things come to market, whether it be the new printhead in the product identification and as energy starts to get some legs to it, I think, it’s fair to say that there will be an evaluation of what we’re – what the business looks like at that time. At this point, these three businesses still being relatively nascent, I would say that we’re probably not at that point just yet.
Nick Ripostella: Okay. Fair enough. Well, I’ll just say this, and by the way, your Investor Relations contact apparently because I’m not an institutional, but I’m still a shareholder, a long-term shareholder, you can’t get through to anyone to speak to or ask questions. I find that a little bit troubling. But…
Joe Bartolacci: I’m sorry. I’m sorry to hear that.
Nick Ripostella: Well, I left many messages. But anyway, here’s the issue. We all want to be long-term investors and there are promising technologies. I just hope that if the stock ends up under 20 or 19 and you never know what will happen as there’s more pushouts and things, I’d like to see the insiders buying a lot of stock. I hope that’s the case. Because you’re levered, you have to pay down debt now. You’re in a situation where you really can’t take advantage in any dramatic way. But that’s it. I just wanted to reflect my opinions, my feelings. Thank you so much.
Joe Bartolacci: Nick, we will – I’ll see to it that somebody can try to reach out if we can get here for me. So I’m sorry about the investor contact.
Nick Ripostella: Okay, thank you.
Operator: Our next question is a follow-up question from Daniel Moore with CJS Securities. Please proceed with your question.
Daniel Moore: It’s kind to get off me. Thank you again. Steve, just kind of looking at the industrial tech, I think, you called out some less engineering work. But just kind of looking at the decrementals this quarter to Q2 last year, EBITDA margin, the decremental is closer to 60% and a little bit higher than what would normally think. So, anything else going on or weighing on margins that might be unusual or temporary?
Steve Nicola: Dan…
Daniel Moore: Revenue decline?
