John Tumazos: And forgive me if I’m asking too many questions and there’s 30 people after me in the queue. I don’t want to hog the meeting. Would your galvanized customers tend to be in a relatively close radius to your facility? And maybe those big mills would have national customers scattered all over the place. That would better lend itself to service and relationships with their neighbors?
Geoff Gilmore: The answer to that is really no. We do tend to sell locally, of course. That makes a lot of sense, but more specifically with our galvanized products, we do ship that product all over the country.
John Tumazos: I should stop and give other people a chance. Thank you very much.
Geoff Gilmore: Thank you, John.
Jeff Klingler: John, thanks for your support.
Operator: We will take our next question from Martin Englert with Seaport Research Partners. Your line is open.
Martin Englert: Hello. Good morning, everyone.
Geoff Gilmore: Hi, Martin.
Martin Englert: Couple questions on the expansions for electrical steel laminations in Canada and Mexico. If you could just provide an update on any pending equipment deliveries, and whether those are on time and how the environment, is for staffing up headcount once you start, to ramp things in the respective locations?
Jeff Klingler: Sure. Good morning. This is Jeff Klingler. I’ll be happy to take that. Just maybe from an overall quick general update, in Mexico, that project is on time and on budget. To-date, we’ve spent about $17 million. The building expansion really should be complete here by late spring or early summer. And we’ll be installing the first presses, here in just the next couple of months. We’ve seen, and this is really true around all of our expansions, we’ve seen very positive staffing, ability to staff up, and a lot of excitement around these projects internally. So that’s a lot – we don’t see any problems there. In Canada this expansion, similar thing, on time, on budget, maybe a little bit delayed due to some land, but we think we’re going to be able to catch up.
We’re talking a month or two. And then to-date, we’ve spent about $5 million, but the ramping is going to start to – but the spending is going to start to ramp up here, through the next few quarters. We’re not going to see production at that facility, so – towards the end of next calendar year, but again, there’s an awful lot of excitement about the project internally and in the community. So, we don’t foresee any problems at this point, with being able to staff up appropriately.
Martin Englert: Of the remainder of the cap, sorry, was there more to add there?
Jeff Klingler: No, go ahead, Martin. You’re fine.
Martin Englert: Okay. Sorry about that. Of the remainder of the CapEx spend for the respective projects, how much of that is fixed pricing versus is there any component that, whether it would be incremental equipment buys, all within the scope of what’s planned that might still have some variability, or inflation risk to the price?
Tim Adams: I think, this is Tim Martin. I think most everything is locked in terms of price. We negotiated the price and we locked those things in, so I don’t think there’s much variability there.
Martin Englert: Okay. Any comments or updates on the backlog for transformers in Canada and how that’s looking?
Geoff Gilmore: Martin, Geoff Gilmore, it continues to be two years or greater backlog for transformers, so we’re still quite bullish on that market. Again, you’ve heard me say, it’s a market we feel will grow much faster than GDP out the next seven to 10 years and a big driver, of why we’re making that expansion in Canada. So nothing is slowing down on that front.
Martin Englert: Okay. Anything, when you think about the pure EVs or the hybrids, as far as what you’re seeing with activity and demand, just reviewing some of the headlines in recent history, it seems like there’s a little bit of a pause, but I know you have a diverse mix on legacy platforms, as well as hybrid and EV, but still curious what you’re seeing?
Geoff Gilmore: Great question. And you’re spot on. I mean, there’s a lot of headlines and certainly these things get a bit politicized, especially in an election year, but – we still are bullish that the market is going to move away from ICE to hybrid and BEVs. Martin, you hit the nail on the head. There’s just not a lot of talk about, how much momentum hybrids are getting. We didn’t enter this business thinking there was going to be a straight line growth curve from ICE to BEV. We figured there’d be a growth slope. It was going to be bumpy at times, because it’s a significant innovation. It’s a supply chain that needs to be built out, but that’s going to happen and costs will come down, but there is a lot more attention and a lot of automotive companies that are feeling that hybrid needs to be a bigger piece of that portfolio.
And more importantly, if it’s internal combustion engine, we produce cold rolled strip. It’s great. If it’s hybrid, you need cold rolled strip for clutch plates. You need electrical steel lamination for electrification. If it’s BEV, you need electrical steel laminations. My point in sharing that is, I don’t know that there’s anybody else globally that’s better positioned, to take advantage of that.
