Mike Jenkins: Yes. Good question, Bill. Typically, this year and the years prior, we tend to be more back-end loaded as a company. It’s the way kind of the timings of some of the projects and the capital cycle tends to work out. I think that the growth rate would be applied, let’s say, at this point in time, and we haven’t really given any specifics on this. But I would see quarter-over-quarter growth throughout the year, but we’re probably going to still the way the quarters will lay out be a bit back-end loaded.
Bill Dezellem: So Mike, just to make sure I understand what you’re saying there is that the rate of change that 10% to 15% is probably similar for each of the quarters. However, in an absolute dollar sense, the year will be back-end loaded just like it was this year and that’s how we get the math to be up 10% to 15% each of the quarters.
Mike Jenkins: Yes. Good summary, Bill. Absolutely.
Bill Dezellem: Okay. Thank you. And then one additional question, please. You’ve referenced the large accounts and their interest in all three business segments. Talk a little bit more about that, if you would, please. And including to what degree this is new customers that are wanting to do a bundle of all three versus existing customers primarily and any additional insights you can share would be appreciated.
Mike Jenkins: Sure. I could use two examples of customers right now. One is a customer that we did a very large EV installation for. Our team, as they’ve worked with this customer has made them aware of our new exterior lighting products, which are available, the new Harris ones that we launched this past year. And so we’re in the process. We quoted $0.75 million project — lighting project for them. So that’s an example of cross-selling, working from an EV standpoint, to lighting. On the other side, we have a long-standing manufacturing customer of ours, public company, multiple sites throughout the U.S. They’re now getting through their strategy on electrification, which will include fleet for them. And we’re engaging — actively engaging with them in terms of helping them design their layouts and requirements as they move forward and then obviously, hope to move that to execution. So those are two examples of some of the cross-selling.
Bill Dezellem: And relative to the new customers versus existing, what you described is primarily existing, do you have any new customers that are coming to you or that you’re finding that are right out of the gates, wanting to talk about doing all three aspects of your business, lighting, maintenance and EV?
Mike Jenkins: I think the reality is that new customers typically come to us about a pressing need in one of the three areas and that once the customer comes into the ecosystem, let’s say, we cross-sell from there. That’s typically the way it works.
Bill Dezellem: That’s helpful. Thank you for the time.
Mike Jenkins: You bet. Thanks, Bill.
Operator: And thank you. [Operator Instructions] And our next question comes from Andrew Shapiro from Lawndale Capital Management. Your line is now open.
Andrew Shapiro: Hi, thank you. You mentioned in your script three of four, I guess, legacy customers on the maintenance side have been converted to have their service contracts up at market prices rather than the money-losing lower price level. This last customer’s contract, it runs off when? Is it during the current fourth quarter or sometime thereafter?
Per Brodin: The end of April.
Andrew Shapiro: Okay, at the end of April. And are there margins at a loss in this? Or have you recognized like a fixed price defense contract, remaining estimated loss in the revenues generated from this contract going forward or just at zero margin? Or there is some embedded loss here?
Per Brodin: No, there is an embedded loss. We do not have a reserve for future losses on that contract based on the nature of that contract. So as we work through the contract, at least the completion of the current contract, we would anticipate there’s additional losses as netting against the other results within maintenance.
Andrew Shapiro: Right. Yes. No, no, already seen the improvement. And someone had asked you the question and maybe you were just hesitant to provide the numerical range of sort. Someone asked you the question on what the normalized margins would be from this segment once the money-losing contract burns off and I didn’t know, are you comfortable or are you able to provide a range or that was just something that you’d rather not for whatever competitive reason that provides?
Per Brodin: Full transparency, I didn’t quite hear the full question before. So we anticipate that business operating in the 20% margin range.
Andrew Shapiro: And then are there any other smaller customers that you have in that segment that are also with these kind of fixed rate terms that have to burn off with smaller amounts of money loss? Or this is it?
Mike Jenkins: Yes. We’ve addressed all of the situation we have and are addressing all the situations, big or small, that need to be addressed from a margin standpoint.
Andrew Shapiro: Okay, excellent, thank you guys.
Mike Jenkins: Thank you.
Operator: And thank you. [Operator Instructions] And our next question comes from Steve Rudd from Blackwell. Your line is now open.
Steve Rudd: Hi, I want to just focus on your last statement that you’ve addressed. You are addressing all the margin issues. And I appreciate the prior callers or questioners clarification on the fourth customer. On the three of the four customers that have not been — that have been converted to the new pricing model with our better margins. What I want to understand is, are there contracts now fully — the negative margin contracts fully done, just like you said, in April and fourth customers loss contract will be done. Is it that there’s — those other three customers, there are no more contracts with them that have these negative margins? Or is it simply that they’re accepting prospectively on new contracts, better margins, but there’s still contracts with them that have yet to work off with the negative margins.
Mike Jenkins: Yes. Good question and good ask for clarification. So we have — to be clear, we have gone to these customers within contract periods and we have successfully repriced three out of the four. As also indicated in my comments earlier, this is the RFP season, let’s say, for the majority of these accounts. So the majority of the RFPs are taking place now in our quarter four. And so therefore, we are — as we suggested, some of these RFPs may not renew because of the profitability concerns that we have.
Per Brodin: Another way to think about it, while the three of the four open the contract — mid-contract, we did not extend those contracts. So they went back to the regular RFP cycle.
Steve Rudd: Okay. And what I want to clarify here, it’s interesting, and I’m glad you guys reached out to these three of the four customers. What’s — or to the four of four, but you had success with this three of the four. What’s interesting to me was their willingness to reprice the existing contracts. And I think the implication there is that those contracts are no longer unprofitable. Is that, first of all, correct implication that these existing contracts with them are no longer unprofitable?
Mike Jenkins: Correct. The ones that have been repriced are profitable.
Steve Rudd: And then the second half of that is with the customers’ willingness to reprice those existing contracts, there’s what I hear in your answer is an implication that the — we probably won’t be doing much more with a number of them, and that’s kind of a strange outcome where, yes, we understand that we need to reprice. But no, we really don’t see — we don’t see the model going forward. And I just don’t — I don’t know how that lines up, but you see what I mean. We need to reprice our contract. But going forward, we really don’t see ourselves doing much more business. Yes, I don’t know how those two line up. Do you follow the conflict I’m trying to resolve?
Mike Jenkins: Sure. Sure. I understand. I would say that they understood the inflationary environment, and therefore, we negotiated our way to pricing within contract periods. Anytime you get into an RFP situation, it’s a competitive situation. And so therefore, there’s a lot of unknowable’s. What we do know is that we’re not going to take on business which is not profitable. And if we end up shedding some of the revenue because of its unprofitable nature and especially for one of these situations, that will benefit us in the long-term.
Steve Rudd: Okay. All right. And that’s obviously the way to go. I do want to ask you one thing, though. Have you or do you have any ability in the marketplace to go forward on a cost-plus model because it seems to me that we got squeezed on our — like everybody did on margins during the pandemic and the bottlenecks, et cetera. But your particular business, I think, might lend itself to a cost-plus model so that we reduce the risk that either we get our pricing wrong or that other exogenous events, which are floating around in massive possibility whack us yet again. So is that a possibility to cost plus?
Mike Jenkins: Unfortunately, that’s not the way the industry works. And so it’s basically a fixed price three year, and the customers are all use the same methodology. So we have to subscribe to that if we’re going to end up doing business with them. So again, we feel like we’ve had some wins. We’ve had some contracts which have been won in some RFPs, which we’ve gotten pricing through which we feel good about. And but we do have some that we’re in the midst of right now, which are unknowable, except for the fact that we’re not going to take on unprofitable business. So that’s what we’ve committed to, okay?
