Steve Manko: Yeah. Good question. And again, it’s going to depend on the level of the tool revenues coming through. We’ve been expecting and communicating that in 2024, the depreciation is falling off and coming down. We’re seeing that take place, and we’ll see that play out, starting really in the second quarter of this year. So that was a big tailwind that we’ve been looking forward to for quite some time. It’s really going to, like I said though, be impacted by the tool revenues. I think as we talked about a few quarters ago, we still look at our base cost of doing business at around $45 million. And excluding tool revenue, we still believe over the course of 2024, we’ll continue to have better than a 50% contribution to the gross profit line coming through for incremental dollars on the revenue side above 45.
Now that’s excluding the tool revenue. Again, that’s going to be a bit of a drag on the gross margin number. But when you pull out the tools and talk about the growth that we expect over the course of this year, we still do expect a better than 50% contribution margin for incremental revenue.
Richard Shannon: Okay. I’ll try to run that through my model and try to nail that down a little bit better here. Maybe a follow-on question on tool sales here — I guess a couple of questions here, really. I think, Tom, I heard in your prepared remarks you were about a $60 million number this year and then some more thoughts on years past this. Were you saying the tool sales you expect to be at or even higher levels in ’25 and ’26?
Thomas Sonderman: Yeah. Well, again, as I said, we’re seeing similar levels for the next several years, so this year and next year and even through ’26, so for model…
Richard Shannon: Okay. I just want to make sure I get the magnitude right. This is really — the follow-up question is a more important one here, thinking about the contributors to this. To what degree is this government versus commercial customers? Obviously, you announced a big government contract earlier this year that’s obviously contributing to this visibility not only past this year. But to what degree are we seeing contributions from commercial customers is multi-sales?
Thomas Sonderman: Yeah. I would say the majority are within the A&D space, the majority of these tool investments. There are some commercial customers, but the majority is definitely A&D. And that is, I would say, consistent with kind of the A&D model. They are investing to put capabilities in place, and we plan on leveraging those where we can into the commercial sector. But they’re the majority investor right now.
Steve Manko: And as we mentioned, when you see tool investments of this size, which is, again, much larger than what we’ve had in the past. It’s really not for one-off individual programs. Although that can still be the case, and it’s still part of our business model. That’s by one tool here or there for development purposes. When you see tool revenues and contribution of this size, it’s really to build out a platform, and that will be a platform that could be offered to many customers down the road. So again, that’s when you see significant investments of this size coming in. You’ll see a good indication of growth in future years with a number of customers coming to development than manufacture off that platform.
Richard Shannon: Okay. Thanks for the detail guys. I’ll jump at the line.
Steve Manko: Thanks, Richard.
Operator: There are no further questions at this time. Mr. Sonderman, I’ll turn the call back over to you for closing remarks.
Thomas Sonderman: Thank you, operator. I want to close today’s call by conveying the strong confidence all of us at SkyWater have and our ability to execute successfully towards our long-term growth and profitability objectives. Our amazing employees have now delivered a three year annual revenue growth rate of [indiscernible] exceeding our long-term targets. We intend to continue to build your confidence in our ability to execute on our future growth and profitability objectives as well. We look forward to talking to you again on our Q1 call in May. And with that, I will conclude today’s earnings call. Thank you.
Operator: And again, this concludes today’s conference call. Thank you for your participation. You may now disconnect.
