Matt Koranda: Okay. All right. That’s helpful. Thanks, Jon. And then just on the Blue Arc program, curious if we could maybe shift to that and discuss, when do we expect — I guess, well, one, do we feel like the battery supplier issue is fully sorted at this point? What are the gating items to getting to production? It sounds like we’re still targeting production at the end of 2024. So nothing’s changed there. When should we expect to see order flow show up for you guys in the firm — or, in the form of purchase orders and firm order flow? Maybe you could just kind of help level-set expectations around the Blue Arc program and the developments there recently.
John Dunn: There’s a couple of pieces there. And if we start off with the battery, I think what’s very important to recognize is the battery we’re using from One Energy is meeting all the requirements. We’re seeing good performance, and we’re not running into any issues through the development process as we continue to validate that. So that’s a positive sign as we did shift from another battery supplier several months ago. So we’re on track there. From an order standpoint, we’re having good conversations with our customers. We’re close to having some clarity on that order and when exactly those are going to start to come in. We already have announced though that we have some relationships with some key dealers that are looking to pull vehicles. I think the next step here is to get end users locked in. And that’s really the focus of the team.
Matt Koranda: Okay. And then maybe just gating items to production, John Dunn or Douyard, if you want to cover sort of capital that’s put in place for this year to get to production in terms of setup and tooling and whatnot?
Jonathan Douyard: Yes. I mean, I think we did, from an OpEx perspective, spent $5.5 million in the quarter, down year-over-year. We guided in our deck, you’ll see $20 million to $25 million of spending from Blue Arc. And so we’re — we continue to be on that run rate. There will be some incremental capital. But a lot of it is behind us at this point. There is some additional tooling we’re putting in the factory. But I wouldn’t — you’re not going to see a huge sort of step-up as we progress through the year from that perspective. And so, I think as you look at the program overall, final development continues on track, to John’s point, production and setting up a line has been in process, and we’ll continue to work and refine that over the next couple of months, and we expect to be in production later this year.
Matt Koranda: Okay. Very helpful, guys. I’ll take rest of mine offline. Appreciate it.
John Dunn: Thanks, Matt.
Jonathan Douyard: Thanks, Matt.
Operator: [Operator Instructions] Our next question comes from Tyler DiMatteo from BTIG. Tyler, please go ahead.
Tyler DiMatteo: Yes. Hi, good morning, everyone. Thanks for taking the time. I wanted to talk a little bit about the infrastructure piece of the business here. Clearly, it’s been a really solid contributor. I guess, can we just add a little bit of color in terms of how you’re thinking about the strategy for that business in the near term? And then what could that look like in the medium term? Obviously, it’s been a nice contributor. Just any other color there for the infrastructure piece?
John Dunn: Sure. What we’re seeing is continued demand in that area. And then as we — our next step is to continue expansion drug and create a national footprint. So we recently, last year, launched the plant in the Nashville area, and we’re seeing nice success there as that continues to grow and take orders. And we see that as the model as we can continue to grow our business in that area throughout the, let’s say, a national footprint.
Tyler DiMatteo: Okay. Great. And then I guess on that footprint piece there, I mean, any other color in terms of your level of comfort with the footprint at large as I look across the different business units, how you’re thinking about maybe new expansion opportunities outside of that infrastructure piece? Any other comments there in terms of just how you’re thinking about it from a strategy perspective?
John Dunn: We’re taking a look at that as a much more holistic view and we’re taking a look at where do we have all of our factories for the different divisions and so how do we leverage those existing footprints better. So going forward, we’re looking to flex additional products into the footprint we already have. So it really saves on opening — the cost of opening a new plant to establishing a new location. We’re well-positioned throughout the country. But we can do more with what we already have. And that’s really the first step. There’s also going to be a need for some additional site locations as we continue our expansion plans. That is a first step, taking a much harder look to say how can we share with what we already have between the different businesses.
Tyler DiMatteo: Okay. Great. Very helpful. Thanks, guys. Really appreciate the time. I’ll turn it back to the queue.
John Dunn: Thanks, Tyler.
Jonathan Douyard: Thanks, Tyler.
Operator: And our next question comes from Mike Shlisky from D.A. Davidson. Mike, please go ahead.
Unidentified Analyst: Hi. This is [Linda] (ph) on for Mike. Thank you for letting us ask questions. So my first question is following up on the battery supplier situation at Blue Arc. How many additional battery suppliers are you working with? And what is this company’s level of experience delivering batteries to truck makers?
John Dunn: We start with Our Next Energy, which is our key focus right now. We continue to have great relationships with them. Their product is meeting all our needs, and we have a high level of confidence of working with them as it goes through the process. We continue to have discussions with the previous battery supplier as well. And that is an option, if needed, and then we’re out there on the market, looking at one to two other battery suppliers, just in case there is that need. But as of today, we’re really focused on Our Next Energy to be the battery that we go into production with.
Unidentified Analyst: Okay. Thank you for the color. And then my next question is, other truck body players have teamed up with third-party pod train providers such as FCCC for their EV delivery vans. Has Shyft given this area any thought, especially with the OEMs you already know so well?
Jonathan Douyard: Yes, I think, Linda, I think what I would say there is we do continue to do that. I mean, we’ve built — if you go back to 2023, we built over 1,000 EV either bodies or van upfits. We continue to have those are running through our factories this year. And so we continue to stay close with, I’ll call it, the legacy OEM supply base. And we’ve got the optionality from that perspective.
John Dunn: I think that’s one of the strengths of having the Utilimaster is still out as the units say, we can build on any chassis, and we’ve proven that. And as Jon said, we did over 1,000 vehicles last year and that trend is continuing this year. And then we have Blue Arc as another alternative just to give our customers options.
Unidentified Analyst: Okay. Thank you for that. And then my last question would be, what do we have to see from a macro perspective in order to start seeing a final-mile vehicle demand pick up again?
John Dunn: I think it varies by customer. We’re in a situation wherein they publicly announced what’s going on, but a couple of them are in different places as they evaluate their situation. And one is heavily impacted in regards to the previous strike on their ability and interest to further bring investment in. Another one is going through a fresh look on, say, how do they want to do that last-mile delivery and how do they want that organization to be. And so as they sort through those pieces, those are two of the big players that are out there that were in close contact to work through that. So it’s really for them to work out some of their internal strategies on what they want to do. What we’re comfortable with is there is a certain replacement rate that needs to occur which is just part of the business. And when that replacement rate kicks back in, we are in the right position.
John Dunn: Thank you, Linda.
Unidentified Analyst: Got it. Thanks.
Operator: And this concludes our question-and-answer session. I would like to turn the conference back over to Randy Wilson for some closing remarks. Please go ahead.
Randy Wilson: Thank you, operator. I’d like to thank everyone for joining today’s call. The Shyft management team looks forward to connecting with the investment community over the coming months. Thank you for your interest in The Shyft Group. And as always, please reach out to us if you have any follow-up questions. With that, operator, please disconnect the call.
Operator: This concludes the call. Thank you for attending today’s presentation. You may now disconnect. And have a great rest of your day.
