Brian Russo: Okay. Great. And then just on the Manufacturing side, specifically BTD, how would you characterize the third quarter performance? I suspect it exceeded your expectations, which is why you raised the midpoint of that segment’s guidance. And then also, if you could just talk about the backlog of 107 million, which is down year-over-year from 141 million. I know there are two components. One is just price of steel, right? So it doesn’t necessarily indicate slowdown of business, but I just thought you could elaborate on that trend.
Kevin Moug: Sure. As it relates to the third quarter, we talked about both the ability to continue to get price increases to help offset increasing labor and other non-material related costs. So the company has continued to excel very well in being able to do that. We saw stronger volumes as well, as we mentioned, that helped drive the increased profitability quarter-over-quarter. And the other item that happened in the quarter, Brian, it’s referenced in the press release and I indicated it in my guidance comments, is the R&D — amount of R&D credits that were recorded in the third quarter at BTD. So we do a fair amount of R&D work for our customers. That’s one of our, I would call it, our core competencies that BTD has that helps keep customers engaged with us.
And we do — we estimate what we expect our R&D credits to be for the year. And then when we — once we finish up, for example, we finished up 2022, we then engage an outside firm to do an R&D credit study for us; in 20 — in this case, ’23, and they come in and they look at the nature of the products, the nature of — I should say products — or products — projects that we did during the year. And what was the nature, were they more complex, was it more materials, those types of things. And we saw about $1 million uplift in R&D credits in the third quarter that we hadn’t fully anticipated. It was driven primarily by increased work that we did for one of our customers that was, I’ll call it heavier type steel and more complex projects they were working on.
So we were able to recognize an additional amount of R&D credit over and above what we had been estimating for that. And then as the Inflation Reduction Act allowed for another method to recognize R&D credits, and we — that new method that was under the Inflation Reduction Act, that allowed us to get additional R&D credits as well as a result of that law that’s in the IRA. And then — so there was a pickup there in our estimate of where we thought it was going to be, and then as we revised our estimate in ’23, based on that new method, that also provided — was part of that million-dollar uplift. And I think we’ve got it listed as $0.02 impact on slide — on the earnings walk slide and the earnings call materials. And so those are the drivers of Q3 results that largely contributed to our uplift in the earnings guidance.
Brian Russo: Okay. I appreciate.
Charles MacFarlane: Maybe, Brian, on the productivity side, when we had the second quarter call, we indicated we — in the process, three prior quarters, BTD was trying to increase employee levels of 20% to 25% amount. And during the third quarter, while we continue to recruit, we have more stabilized our employee level. So we saw improving productivity of the overall workforce there.
Brian Russo: Okay. Great. And then just on the backlog, the trends you’re seeing there year-over-year, and is there any read-throughs?
Kevin Moug: Yeah. In terms of backlog, the primary difference there in the backlogs is just because of the steel pricing between the years, Brian, is what’s driving that. But in terms of what — the work we’re seeing from our customers, they continue to look to us for provide services that their other supplier base either is not providing timely or not providing quality type work. So they continue to look to BTD, not only currently, but on a go-forward basis, to deliver the product that they need for their end use product, whether it be in recreational vehicle or ag or construction. But the biggest difference would be in the steel price between the years.
