So again, Q2, you’re absolutely right, sort of flattish to slightly down. But expecting Q3, Q4, that capacity to kick in with the receiving facilities.
Operator: Our next question will come from the line of William Stein with Truist Securities.
William Stein: I wanted to actually hit on some overlapping topics for the last question and that was, your guidance in aerospace defense through this sub-seasonal. I think you sort of just explained it, but I just — I am reminded what has happened historically when we see book-to-bill very strong in aerospace and defense and the backlog go up, but we know it’s sort of long duration backlog. And there are quarters when you have the lack of growth where we anticipate more growth because of the good bookings. In the past, it’s been related to labor shortages and I wonder if that’s still dogging the company in any way or if this is something different.
Thomas Edman: And so labor is always a factor. We’re — that is certainly an area of focus in several of our facilities. I would say that the headwind we have in A&D continues to be concentrated in supply chain. We’re still looking at a headwind of about $8 million quarterly. That’s about — that’s less than half of where we were a year ago. But we still do have that headwind to overcome each quarter. But really, with our businesses as we stand today, it’s about production volumes, how we can get those out. And then as you remember, with the addition of Telephonics, we have a percent complete accounting recognition there with mission systems. So that can get a little bit lumpy depending on where we are in the percent complete process.
So those are factors that go beyond sort of where we were traditionally in that business. And so from a labor perspective, absolutely ongoing challenge, but really it’s much more of that supply chain situation. And then just a little bit of lumpiness as we ship out on particular programs.
William Stein: Tom, the book to bill in the commercial markets was really stronger than it’s been in many quarters by my math, but I think you just — you answered that. It sounds like you’re expecting revenue to continue to accelerate there in the back half. So let me instead focus on OpEx. This is an area — I guess, I was a little surprised that OpEx is up year over year, and I wonder what we should expect going forward? Is there any activity to kind of constrain that going forward? Or are there any unusual things that drove the increase year over year? Thank you.
Daniel Boehle: Thank you for the question. Well, there were a few one-off items in Q1. There were some personnel related and healthcare related to true-ups in Q1 that were year end accruals that — our estimates, we had a little bit higher Q1 true ups than we had expected. And then with regards to the Syracuse expansion, we had about $1.5 million application fees that we paid in Q1 that were budgeted for later in the year. And so the conglomerate of those in the first quarter was about $8.5 million of additional OpEx expense that were — will not recur. Those are one-offs. But even with that headwind from Penang, we’re still up 100 basis points operating margin year over year. We’re forecasting increasing that up to other another almost 190 basis points in the Q2. So yes, you’ll see that come back in the second half of the year, continue to grow.
Operator: Our next question will come from the line of Mike Crawford with B. Riley Securities.
Mike Crawford: Could you provide the lifetime value of the automotive program wins you secured in the quarter?
Thomas Edman: Sure. So not a great quarter in regards to automotive. We had about $20 million in wins in terms of program wins in Q1. If you look a year ago, we were at $267 million. So that’s quite a difference, Mike. And as we look at what to attribute that to, it appears that our customers — and remember, most of our customers are the Tier 1 parts suppliers that — they’re dealing with market turbulence as they look at program shifts with EV coming on, with some of the changes in terms of their global marketplace. And for the second quarter in a row, they’re withholding packages as they try to get more certainty about production starts. And again, they’re trying to anticipate production starts that would begin a year from now.
So you can imagine how challenging it is in the environment out there to anticipate those production starts. So we’re just not seeing the volume of package opportunities that we saw last year — this year. So that’s what appears to be going in auto.
Mike Crawford: Okay. Thank you. And then just regarding the new facility in Syracuse, it looks like you’ve already received some $60 million in local tax breaks, but you’re hoping to get some federal equipment purchase breaks as well. And did I hear you say you’re still hoping to break down within the next two months?
Thomas Edman: So you’re right, the state has been very forthcoming and really thrilled with that. And we’re just — yeah, we’re just looking to finalize the federal side and that takes a bit more time. So we’re working our way through that. And I’d also say that in the quarter, we were able to firm up our agreements with customers as well. So hasn’t changed our overall schedule in terms of breaking ground in the first half of the year, but just working through sort of the final stages here of preparation as we as we get ready to break ground.
