Ram Mayampurath: Hi, Dan, let me take that. I’ll start with that and Colin might want to add comments to this if you have a follow-up. Talking about Q3, Q3 is a mix bag. We know the curamik power electronics slowdown we talked about will impact us in the second half of the year, that was more recent development. However, we do see growth in other areas, we do see the seasonality coming through with portable electronics that we usually see. And with the changes we have made to the product cost structure, we feel good about the 35% plus guide. I know the 35% plus estimates we have provided assuming a certain level of top line sales range. Getting into Q4, you’re right. When we’ve seen some fluctuations in Q4 and that’s also mostly related to the top line.
If you look at Q4 of last year, we had a very steep drop, which we even guided it lower. But we hit the actuals were lower than our guidance, we were expecting some drop there. So once again, if the revenue top line levels remain at that 230 plus level, we feel good about staying at a 35% level for gross margin.
Colin Gouveia: Dan, Colin. I’ll just add from a higher level perspective that normalizing the fluctuations in gross margin, how they’ve cycled up and down this first 15 months is one of our key objectives. And we know that it’s volume throughput, which helps take away some of the absorption headwinds we face when volumes decrease. But we have done a lot of work on operational execution. But there is more to go there. And we think that will also make a big difference. So when you look at how we’ve worked down our backlog, how we’ve improved our on-time delivery to performance, or excuse me to promise or to request, and then our improvements in scrap and yield. It’s been impressive, but there’s more we can do there. And I would say that that will also help us get more, I think stability into the system.
And it’s a key goal from the beginning when we started this journey recovering from the end of the DuPont deal and we’ve made a lot of progress. But there’s still more we can do on that type — on that side of things beyond just the volume coming back. I just wanted to put that out there. So that was clear.
Daniel Moore: Not really helpful. And we’ve covered a lot of ground already. So just maybe a big picture. By all accounts, the [indiscernible] EV adoption has slowed and consumers are opting for HEV alternatives, at least for now. But maybe just can you tell us about the size of the opportunity in HEV relative to EV, whether it be in content terms or TAM or growth rates, if that trend continues over the next 3 to 5 years, how should we think about the kind of the relative scale or size of the opportunities?
Colin Gouveia: So we’ve had a lot of requests in terms of could we share more on content. And we haven’t done that. But we’ll look at ways to share better going forward on that. But at this moment, a general comment would be in terms of EV, we would have the most content in that vehicle across all of our product lines. And for hybrid electric vehicles, we also have a good amount of content as well. But it wouldn’t be as much they still use inverters, they would still need pressure management for the battery. Typically for lower voltage usages, you would not use a ROLINX power interconnect business, that business excels when it’s high voltage and you need high performance. So when we see that shift to plug in hybrids versus EV, it does impact content level.
But we still see a very good growth level for those types of vehicles. There are certain OEMs that are out there where hybrids have doubled and we see that pull through. So it’s a balance of our content, which may be a bit less versus full EV. But the growth rates are still quite substantial and well north of 10%. So we don’t see much of a fall off, should more growth happen in the plug in hybrid segment versus pure EV.
Daniel Moore: Really helpful. And I guess last you touched on it. But in terms of capital allocation, paid down the last of your outstanding debt. You’ve gave us the updated internal investments in terms of just priorities for incremental capital allocation with the M&A pipeline look like, I assume no major changes quarter-to-quarter. But any level — any more dialogues there and barring that your own stock looks pretty attractive relative to what the — I know you don’t have the ’25 goals, but certainly with the kind of longer term expectations are. So [indiscernible] planned default to continue to opportunistically buy back stock like you have the last few weeks. Thanks again for color.
Colin Gouveia: Yes, I can start on M&A. So we’re really pleased that our debt has been eliminated. So we have a very strong balance sheet. And M&A remains one of the four key pillars of our strategy. And we haven’t had an acquisition since Silicone [ph] Engineering, which was quite a ways to go. And that’s still going very well for us. But we are actively in the market, we’ve got a very rich pipeline of very interesting properties that would fit very well, if they would become part of Rogers. It’s still — as we’ve said earlier, not necessarily a buyer’s market, people are still waiting for things to turn around a bit more before they would go to market. But we’re actively engaged with several targets that would be a great addition to Rogers, and we plan on moving as fast as we can in that space.
Just nothing further in that area to report at this moment. And then in terms of capital allocation regarding share buyback, I think Ram would like to jump in and give his perspective.
Ram Mayampurath: Sure, I can comment on that. So Dan, you’re right going forward our focus will shift to an organic growth and opportunistic share buyback. At the end of Q1 2024, we had $24 million remaining from our current repurchase authorization. We have bought back shares in the last few weeks, and will continue to do so opportunistically going forward.
Daniel Moore: Very helpful. Thank you again.
Operator: Thank you. Our next question comes from the line of Craig Ellis with B. Riley Securities. Please proceed with your question.
Craig Ellis: Yes, thanks for taking the follow-ups. Dan got the one I wanted to ask about EV and HEV trends and content implications. But the other follow-up I had was more on your side, Ram. So there were a number of references to cost management. And my inference was that a lot of that was related to COGS. But in the last 4 months, is there anything new with respect to cost management initiatives in the middle of the income statement, SG&A. And as we look out over the course of this year, beyond the $1 million that we have for startup expenses, is there anything plus or minus that is notable that we should expect? Thank you.
Ram Mayampurath: Yes, sure. So if you look at our OpEx from ’23 compared to ’22, Craig, we are — our OpEx and dollars is lower in ’23 compared to ’22. So we have been watching our OpEx carefully. And remember, it was a year of high inflation as well. And going forward, like you said, we will have some startup costs running through OpEx. We have a little bit of seasonality that impacts us in the first half of the year. Second half OpEx will be lower than first half OpEx. And we are watching our cost very carefully given the top line, build back, and our long-term goal remains at 20% OpEx. And there’s no change to that.
Craig Ellis: Thank you, Ram.
Operator: Thank you. There are no further questions at this time. I’d like to turn the floor back over to Colin for closing comments.
Colin Gouveia: No further questions, I just like to say thanks everyone for joining and we look forward to talking to several of you with callbacks over the next several weeks. Thank you.
Operator: This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.
