Good morning, everyone, and welcome to the Spartan Motors, Inc. Fourth Quarter 2018 Earrings Conference Call. All participants today will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that today’s event is being recorded.

And with that, I’d like to turn the conference over to Juris Pagrabs, Please go ahead..

Thank you, Brian. Good morning, everyone, and welcome to the Spartan Motors 2018 fourth quarter earnings call. Joining me today on the call are Daryl Adams, our President and Chief Executive Officer, and Rick Sohm, our Chief Financial Officer.

For today’s call, we’ve included a presentation deck, which will be filed with the SEC and will also be made available on our website at spartanmotors.com. You may download the deck from the Investor Relations section of our website to follow along with our presentation during the call.

Before we start today’s call, please turn to Slide 2 of the presentation for our Safe Harbor statement.

You should be aware that certain statements made during today’s conference call, which may include management’s current outlook, viewpoint, predictions and projections regarding Spartan Motors and its operations may be considered forward-looking statements under the Private Securities Litigation Reform Act of 1995.

I caution you that as with any prediction or projection, there are a number of factors that could cause Spartan’s actual results to differ materially from projections. All known risks that management believes could materially affect the results are identified in our Forms 10-K and 10-Q duly filed with the SEC.

However, there may be other risks that we cannot anticipate. Please turn to Slide 3. As of January 1st, 2018, the company adopted the new revenue recognition standard, ASC 606, using the modified retrospective transition method. The adoption reduced Q4 net income by $0.3 million – excuse me, $0.9 million.

Reported consolidated sales and cost of products sold were lower by $7.2 million and $6 million respectively. The adoption reduced reported consolidated backlog by $25 million, reducing both FVS and ER reported backlog by $7.3 million and $17.7 million respectively.

For more details regarding revenue recognition and its impact on the company’s financial results, see the company’s Annual Report on Form 10-K for the year ended December 31st, 2018.

On the call today, Daryl will provide an overview of our year and a business update and then Rick will provide a more detailed review of the fourth quarter results and our outlook for 2019 before proceeding to the Q&A portion of the call. At this time, I’m pleased to turn the call over to Daryl for his opening remarks, which begin on Slide 4..

we are approaching 6,000 units shipped to a leading global e-commerce customer, we’ve shipped more than 1,000 FedEx Ground units and for the first time, Canada Post has started ordering again to keep up the last mile delivery demand.

As a result of our work-driven design and sales approach, we have signed six new special service vehicle customers for high content vehicles in various classes, which primarily serve the utility industry. Last mile delivery, including refrigeration, continues to expand and represent a significant growth opportunity for Spartan.

As we indicated in the past, we’ve been working closely with some of the largest and most innovative parcel and grocery delivery companies to provide them with solution-based vehicles and uplift products, including new refrigeration capabilities and electric powered chassis.

Our engineering team has been hard at work with the development of a new refrigerated last mile grocery delivery vehicle, and we were awarded a patent for a keyless entry system and received a patent pending designation for our roller shelving design, which makes package delivery more efficient for our customers.

Last quarter, Amazon and Mercedes announced a 20,000 unit order for the Sprinter cargo van, and, as we’ve indicated last quarter, we are currently operating a ship-through facility located in Ladson, South Carolina for the Mercedes Sprinter, upfitting units for an e-commerce customer.

We continue to receive orders, but it is unclear how many units from that initial announcement we will be awarded. We are also upfitting the Dodge ProMaster platform for the same e-commerce customer at our ship-through facility located in Saltillo, Mexico.

We expect our relationship with the e-commerce customer to continue to develop and grow, including expansion into additional vehicle classes, which is exciting as we continue to work and develop platforms to suit their needs.

The Ephrata team, which is focusing on the USPS truck body order, has shipped over 900 units for the year, exceeding our original plan. As we indicated last quarter, responding to our customers’ environmental sustainability initiatives continues to be a major focus for our investments in electrification.

EV chassis development in partnership with other customers and suppliers will continue to receive attention in 2019 and beyond to give Spartan first-to-market electric vehicle production capabilities across vehicle classes 1 through 6 and, in some instances, class 7. Please turn to Slide 7 and I’ll continue to Emergency Response.

Our ER business saw another successful year of profitability. Despite the industrywide headwinds impacting in the second half of the year, I am pleased with the progress to improve financial results over the past few years, including successful navigation through the acquisition disruption.

However, we have a lot of work ahead of us to ensure operational effectiveness in the ER segment. In January, we announced that Todd Fierro was appointed President of ER. Todd is a seasoned manufacturing executive – which includes Fortune 500 company experience at Oshkosh and Ford.

We look forward to his extensive experience in manufacturing operations, including product development, sales and distribution, to help drive and improve Emergency Response’s long-term profitability. In December, we announced a large 13 unit custom fire apparatus order to be delivered to the metropolitan fire department of Texas.

This order includes nine custom built engines and four aerials. I am pleased with the efforts of our new ER sales team as we gain traction and begin ramping up our backlog. Excluding the impact of revenue recognition, ER segment backlog at the end of Q4 increased 18% sequentially over Q3, while the industry has seen a decline in sales.

When compared to our 9.5% increase to the corresponding period ending Q4 2017, it confirms that our ER sales team is doing a nice job. Please turn to Slide 8, and I’ll continue with Specialty Chassis and Vehicles segment.

Our SCV business unit performance has accelerated growth this year through our continued investment in technological innovations to increase a leading position in our core luxury motor coach chassis market.

We’re committed to push innovative technologies into the luxury coach market with the introduction of industry-leading features that end users consistently demand. We’re proud to announce that we finished this year with a 30% increase in motorhome chassis shipments compared to the broader Class A diesel industry, which was down over the same period.

This solid year-over-year increase underscores Spartan’s ability to produce high-quality innovative products at our customers’ demand.

The solid momentum in SCV segment continues to grow in both the over and under 400 horsepower segment as we finish the year with a market share of 22% in the premium diesel category, an increase of two points from last year. Since 2014, Spartan market share has grown 44% in this category.

I’m pleased to report that our K1 360 chassis continues to be well received. As a reminder, our SCV team recently responded to customer request to enter into the sub 400 horsepower diesel chassis market, and we delivered.

The K1 360 chassis was successfully rolled out on the Entegra Reatta in the spring of 2018, and based on this initial success, we added new platforms, including Jayco Embark, as well as a new customer NeXus RV. These recent developments represent [Technical Difficulty] motorhome model launch this year and a second new customer in addition to Jayco.

With that, I will turn the call over to Rick to discuss Spartan’s financial results for the fourth quarter as well as our outlook for 2019..

Thank you, Daryl. Please turn to Page 10. As Daryl mentioned, the underlying fundamentals of our company remains strong. The performance of each of our business segments reflect the hard work and dedication of our entire team to overcome the industrywide headwinds we faced in 2018.

Due to the effort, I’m pleased to report our fourth quarter results exceeded our expectations. Revenue for the fourth quarter grew by 29% to $233 million from $181.1 million.

Revenue growth was primarily due to higher volume related to USPS truck body, which included $34 million of pass-through revenue, cargo van upfit and Reach, which was partially offset by lower ER revenue.

Gross margin was lower by 350 bps to 10.1% of sales from 13.6%, primarily driven by higher tariff related input costs, chassis availability and material lead time. And earnings per share for the quarter were down $0.02 to $0.05 per share. If you turn to Page 11, I’ll cover adjusted profitability.

Fourth quarter adjusted EBITDA declined 28% to $6.7 million from $9.3 million. Adjusted EBITDA margin declined approximately 220 bps to 2.9% of sales from 5.1% a year ago. Excluding the impact of the truck body pass-through revenue, adjusted EBITDA margin would have been 3.4% or 50 bps higher.

The decline was, again, driven by the same factors I mentioned earlier. Adjusted net income declined 11% to $3.4 million from $3.9 million in the prior year. Adjusted EPS declined to $0.10 per share from $0.11 per share in the prior year. Our backlog at year-end remained strong and ended at $473 million compared to $535.1 million in the prior year.

We had $214 million of USPS truck body in the backlog a year ago compared to $114 [ph] million at the end of Q4. The backlog at the end of Q4 reflected a customer change order that effectively reduced the backlog by $17 million.

Excluding the truck body order and the impact of revenue recognition, backlog grew by 20%, reflecting across-the-board improvement. Now, we’ll take a look at results by operating segment, starting with Fleet on Page 12. Fleet reported revenue of $131 million compared to $65 million in the prior year, a growth rate of 102%.

The revenue growth reflects higher volume related to USPS truck body, which included $34 million of pass-through revenue, cargo van upfit and Reach vehicle revenue.

Adjusted EBITDA grew by $0.7 million to $6.5 million from $5.8 million a year ago, largely due to higher volume and partially offset by unfavorable mix and higher tariff driven commodity and component costs. Adjusted EBITDA declined – excuse me, 400 bps to 4.9% of sales from 8.9% a year ago.

Excluding the impact of truck body pass-through revenue, adjusted EBITDA margin would have been 6.7% or 180 bps higher for the quarter. Backlog remains strong at $218.8 million compared to $267.7 million in the prior year. Excluding the multiyear USPS truck body order, backlog totaled $105 million, up 96% compared to $53.7 million a year ago.

If you also exclude the $7.3 million impact for revenue recognition, backlog was up 109%. Moving on to Page 13 and the ER segment.

Fourth quarter 2018 revenue declined $16.9 million to $59 million from $75.9 million last year, primarily due to lower volume, reflecting an industrywide sales decline, our acquisition disruption and unfavorable mix, partially offset for higher pricing in 2018. The adoption of revenue recognition decreased reported ER revenue by $5.2 million.

Adjusted EBITDA for ER declined $3.7 million to a loss of $1 million or 1.7% of sales from a gain of $2.7 million or 3.5% million in the prior year. The decline in adjusted EBITDA is a result of lower volume, higher tariff driven commodity and component costs, partially offset by higher pricing.

Our ER backlog was $216.5 million compared to $233.6 million in the prior year, which reflects the $17.7 million reduction from adopting the new revenue recognition standard. Turning to Page 14 and I’ll talk about SCV. Revenues grew 12% to $45.8 million from $41.1 million, primarily due to contract manufacturing and luxury motor coach volume.

Adjusted EBITDA grew by $0.7 million to $5.3 million from $4.6 million a year ago, primarily due to increased volume and improved mix. Adjusted EBITDA margin improved by 40 bps to 11.6% of sales from 11.2% a year ago.

Backlog at the end of the quarter grew 11.4% to $37.7 million compared to $33.8 million a year ago, reflecting continued strength in luxury motor coach volume. Turning to our balance sheet on Page 15.

Total liquidity at the end of the year was $113.8 million, reflecting $27.4 million in cash and $86.4 million of borrowing capacity, which is sufficient to support our long-term growth plan and our capital allocation strategy, including the recent share buyback.

As we announced in December, we entered into a 10b5-1 trading plan and began buying back our shares at pre-determined terms and limits as part of our prior Board authorization to repurchase up to one million shares. Through yesterday, we have purchased 191,000 shares for $1.4 million or an average price of $7.55.

The buyback reflects our ongoing commitment to deploy capital in a manner that provides the best shareholder return.

And finally, in accordance with revenue recognition, we have a contract to asset value of $36 million on the balance sheet, representing revenue and the resulting profit recognized on in-process product but not yet invoiced to the customer. Turning to Page 16, and I’ll cover the outlook for 2019.

While the team did a good job of working to quickly mitigating the industry headwinds occurred in 2018, we are aware that a few of these industry challenges will continue into 2019, including higher tariff driven commodity and component costs and chassis availability.

We remain cautiously optimistic about our ability to mitigate most of those challenges and improve the profitability of all three of our business segments as we remain encouraged by the strength of our backlog and underlying business fundamentals.

Looking ahead, we expect 2019 to be a strong year with revenue growing high single digits and overall adjusted EBITDA and adjusted EPS growth to accelerate.

We expect revenue to be in the range of $865 million to $905 million, net income of $19.5 million to $22.6 million, adjusted EBITDA in a range of $37.1 million to $41.1 million, will have an effective tax rate of approximately 23%, will have EPS in a range of $0.56 to $0.64 a share and adjusted EPS of $0.57 to $0.65 a share.

I would now like to turn it back over to Daryl for his closing remarks..

Thanks, Rick. Please turn to Slide 17. In summary, I want to emphasize that the underlying fundamentals of our three business segments remain strong.

Despite a difficult and challenging 2018, the work – the hard work of the Spartan team for the past four years implementing operational, organizational improvements has increased our adjusted EBITDA more than threefold.

As we respond to these dynamic market conditions and invest proactively [indiscernible] and meet these evolving market needs, we’ll do so in a way that enhances shareholder value.

We’ll remain focused on executing our overall strategic plan, including our capital allocation strategy, which reflects funding our growth initiatives, including acquisitions and creating shareholder value.

Our leadership and every team member at Spartan Motors are aligned with the long-term goals of our shareholders and we seek to serve our customers and ultimately drive long-term returns to the owners of our company. Operator, we’re now ready to take some questions..

We will now begin the question-and-answer session. [Operator Instructions] Our first question will be from Matt Koranda with ROTH Capital Partners. Please go ahead..

Hey guys, good morning..

Good morning..

Good morning..

Morning, Matt..

Just wanted to start out on the Fleet Vehicles segment. So in terms of backlog, it looks like implied order flow in Q4 was actually pretty strong in what is usually kind of a seasonally weaker quarter for you guys in terms of orders.

Can you talk about some of the factors that drove that? And as Mercedes Sprinter driving some of that strength, just a little color there would be helpful, and also maybe the Strobes the acquisition contributed in any way to the FVS backlog..

Good morning, Matt. Good question, and I’ll hopefully answer it. If not, please continue to ask. I think it goes back to what we’ve been talking about, right, as – in that segment, you’re going to have the replacement vehicles for our standard customers, you have a couple new customers coming into the market.

And with that and the e-commerce business continued to improve is driving that increase. I think we talked on last quarter that – or maybe before, that these customers, they typically would want to – they have all their units to them by Halloween, are now taking them throughout the year because they’re seeing the demand increase.

So, again, with our strategy of one-stop shop, classes 1 through 6, right, we touch all the vehicles [indiscernible] the higher class. We believe, we’re still well positioned, and I think it’s what we’ve been saying over the last couple of years is starting to pay off, and the team is doing a really good job.

I’m talking to not only the big e-commerce, but even to smaller ones and some of the smaller grocers. And one last one, Strobes was not significant in Q4, but we expect to see the benefit throughout the year this year..

Great. Maybe just one more on that front. Wondered if – I don’t think you’ve had sort of a public venue yet to talk about the strategic rationale for the Strobes acquisition.

I mean, can you talk a little bit about where you saw opportunity with that? To what extent does it help you in terms of your footprint and capacity to deliver on some of the other fleet vehicles products that you’re bootstrapping the moment?.

Sure. So I think if we go back and listen to some of the calls or even the meetings, our strategic plan suggests that we should be closer to the coast, right. We spend a lot of money on freight. We’ve missed out on some orders because of our location in Indiana. And we took the advantage of the USPS order, moved it out to Ephrata.

And we’re starting to see some order flow come through. We said we’re going to start point of sales guys in Q4 and Q1. We’re starting to see some activity in Pennsylvania, which is going to help with the growth and strategic plan. Ladson, we are there for the Sprinter.

And then – we had a void when you look at where these trucks are purchased in some of the heat maps, if you will, from different data suppliers so that – Florida is a pretty big market and we weren’t in there and trying to move trucks from Pennsylvania – or units from Pennsylvania or Indiana was a long distance and we’d be not competitive.

So that helps us there. It also moves us into a new market that we’ve not been in. And we like the strategy that these guys have for their upfits. And I think, the last thing is we can move our van upfit into their location as well as the products that they were upfitting we could offer to our customers in the other two.

So I think if we go back, our goal is not to move walk-in vans out of Indiana, but our goal is to move upfit truck body and now this vehicle upfit that Strobes has into the, if you call them, coastal locations, if you will so that we can level out any seasonality or larger flow of orders in and out.

So it’s going to fill out and we’ve talked about moving west now into somewhere in Texas and then continue to move to the West Coast, whether it’s Arizona or we get into California..

Okay, very helpful, Daryl. Thanks for that detail. Wanted to touch on the 2019 outlook for a moment. I know you guys mentioned that you are factoring in some sustained headwinds that are industrywide in terms of chassis availability.

Just wanted to get your view on sort of what Spartan can do to manage through some of the longer lead times and availability issues that are out there in the industry and to what extent you guys control your own destiny on that front.

And I guess if there’s any way of quantifying sort of the headwind that you’ve built into 2019, that would be helpful..

Yes, Matt, Rick here. I think if we look back at the end of 2018, we continue to see price increases from the other supply base. And as you know, ER takes a long time to get that revenue back to offset it.

I think we have less of an impact in Fleet, but price increases we saw at the end of the year, we aren’t going to be able to mitigate that for five to six months. And then I think the other thing we talk about is chassis availability. We continue to be impacted but at a much lower rate by the impact of chassis delays, primarily in our fleet business.

So the chassis delay, we have a hard time mitigating that. We’ll have a bit of a lag in the revenue to offset the commodity increase, but we’re working on that. And right now, we’re talking about what we’re aware of today.

Yes, I don’t think we can be confident that the chassis shortage won’t continue longer or that the price increases are done coming..

Got it. That’s helpful, Rick. Thank you for that. And then just what it sounds like is maybe you’re incorporating some price/cost headwind maybe end of the first half of the year before we start to maybe see a little bit more relief on that front in the back half.

I don’t want to put words in your mouth, but is that sort of roughly – rough cut of a way to think about how things progressed through the year in terms of you guys taking price and offsetting some of the component and commodity inflation?.

Yes, I think for our fleet and for our motorhome business, that’s a good way to look at it, the first half of the year impact. Our ability to react to price increase at the end of the year in ER is more difficult. That could be an impact for ER for the entire year..

And Matt, can I add – as a reminder, I talk about it – my first piece here today is that we’re taking pricing at all three of the segments where we can.

There was some discussion I believe on the last call that people had added surcharges in and we do have contractual obligations, but where we can add surcharges we’re surcharges in as the material continues to move around.

So we’re not standing still, and I think it – from what Rick said is, it is a little bit more controlled at some divisions than others, but it does – it’s our focus every day and we’re – we’re going to do – continue what we did in 2018, and we believe we have a pretty good strategy..

Okay. And last one from me, I guess, is a follow-up to that. Where you guys seeing the most input cost pressure I guess on the component side? I mean, it would be helpful to get a little color on where that’s still coming through relatively strong, to the extent you can provide any detail..

I think that if you look at the raw commodity or the manufactured parts that we buy in aluminum, yes, obviously the biggest impact is at Fleet. If you talk about component cost like an engine, an axle and other manufactured components, that would probably hit ER and Specialty much harder..

Okay, that’s helpful. I’ll jump back in queue, guys. Thank you..

Next question will be from Steve Dyer with Craig-Hallum. Please go ahead..

Thanks. Good morning, guys. And Rick, nice to have you back..

Well, thank you, Steve, I appreciate it..

I second that, Steve..

Couple of things just on FVS. Your large e-commerce customer, it sounds like in the prepared remarks you have seen subsequent orders to the first 20,000 and maybe getting into some other vehicle classes as well.

So is that sort of incremental to the first sort of agreement or the first order? Or was that sort of always the plan?.

I think if – just want to clarify Steve, and if you go back to my session, that was an announcement by Mercedes and Amazon. So far, we’ve done I think over 6,000 units. We are not sure how much of that 20,000 Spartan is going to get.

As I’ve said on previous calls, I spend some time approaching it – if I was Amazon, I would not source – single source this. So the 20,000 is not what we have received. We’ve done over 6,000, continuing to get some orders, and I do believe, right, that they’re going to still source some of the product.

I believe we’re in a good spot to get our fair share or even more, but I wouldn’t put the number at 20,000..

No, understood. I guess, better said, your portion of that, you feel like that is continuing to increase. I mean, orders are coming in. It wasn’t just sort [indiscernible] at the beginning..

Yes, yes, and I didn’t answer the second part of your question, right? So those are the Eurovans, and we’re also talking with the same customer, some walk-in van units and then even some truck body units.

So that goes back to our strategy of having a one-stop shop for customers where they can come to Spartan for Utilimaster and get classes 1 through 6. And as – that excited them, but they still only want to deal with one company, not a whole bunch.

And those are – those talks are continuing, and we’re optimistic that we’ll have some orders in the future..

Got it. And then the USPS deal and effort, it sounds like you’re about 35%, 40% of the way through that.

I guess question around that would be, is there additional opportunity with this customer for something similar? Or are you seeing traction sort of – are you seeing something to sort of fill that space when this is done in five or six quarters?.

Right. Good memory. We have a carry-on order or tag-on order opportunity for a few hundred units that we are in talks with them on right now. They’re discussing when they need them and how they need them and if they need them. But we’re also, as we’ve mentioned in the past, I’ve got boots on the ground in Q4 and in Q1.

Initial feedback we are receiving from customers and the dealers is positive. We actually have an order earlier this year, right, that we’ve received to start fill that up. So it’s early, but we see a nice bridge to not have that – clarify, again, right? We’re not going to replace the sales.

We just need to replace the EBITDA because we are prime, we’re paying for that chassis. We talk about it a lot, if you separate the chassis from our numbers.

So we have to replace the EBITDA and we see a – we’re optimistic about the orders we’re seeing and the conversations we’re having that when we come to the – later in Q3, early Q4, we’re going to have some trucks filling up the EBITDA – that, the gap will be if this – if you don’t get the carry-on order – the carry-on order will continue, and we could lower the units.

I think, I’ve said that plant is built to do 12 a day, and right now we’re at eight a day. So that’s the – why we designed it so that we can bridge that and not have that cliff at the end of the order..

Got it, that’s helpful. Last one for me, and then I will jump back in the queue. On the ER side of the business, profitable there again, seem to be bucking the trend of the industry. I haven’t heard much recently about the 360 Day truck.

That was something you guys talked a lot about, which I think – I guess, I’m just curious to see is that still an initiative? Is that a big sort of driver behind the profitability in that segment? And where do we stand with that?.

Yes. So you just gave my operational guys a lot of leeway because that’s – we call it 180 Day truck, not a 360….

I got you. Okay..

So I’m not going to let them off the – we’re still building them. And I think, once we got into a year of producing – talking about it, we just rolled it right into our standard units, and it’s still a good seller for us. I think we have eight of them coming out in the first half of the year. So let’s – maybe, it’s even in the first quarter, I forget.

We’re building demos because dealers want to have them. So that’s still a product line.

But you have to understand that we added the LT – when we bought Smeal, we had the Ephrata facility, which was the old American LA France Ladder Tower unit, and we spent some money getting those all PE certified, professional engineering certified, because they hadn’t built in over 10 years. So those are coming in as well into the order bank.

So the product diversification that we’ve added with the S180 and the Smeal Ladder Tower products out of Ephrata is helping with the order.

And I think the – if you go back to our increase, right, we had some of that acquisition disruption we’ve talked about with our dealers and our sales people, both on Spartan side and Smeal side, that is settling down and we’re seeing it in the order intake.

We’ve had – Q4 was really good for us and we’re seeing orders above our plan already in the first few months of this year.

And it’s exciting when the industry has got a bit of a decline and we’re, as you said, bucking that trend, so that’s exciting for us and for the team, right, because they were in a lot of pressure on upcoming units were going down.

But the backlog is now moving up and we’re optimistic that it’s going to continue and that this will continue to help improve the bottom line in the year..

[Operator Instructions] The next question will be from Steve O’Hara with Sidoti & Company. Please go ahead..

Yes, hi, good morning..

Good morning, Steve..

Good morning, Steve..

Just on the guide – the revenue guidance for 2019. I think you had said the US Postal Service contract is $114 million in the backlog right now. I think that was all supposed to be completed by the end of 2019. So I mean, I guess, I’m wondering is there something else that’s declining.

I mean, it would seem like revenue should be little bit higher in 2019. Are we expecting kind of continued softness in the ER segment? And then maybe if you could just, if you covered it, I apologize, but it terms of the EBITDA for Emergency Response, maybe what the trajectory looks like there for 2019? Thank you..

Yes, no problem, Steve. You’re right. On the USPS deal, the impacts are the remaining portion of the $114 million should be completed in 2019. I think from an overall perspective, right, Daryl mentioned momentum in ER continuing. I think in early January and February, we saw some of that growth rate increase similar to what we saw in the fourth quarter.

So, I think we’ll continue to see ER growth, but overall volume for the year will be higher but not significantly higher..

And Steve, I think to add to the USPS question that you had. I think you asked what’s going to fill that line of clip, and we talked about it, where we were going to put boots on the ground in Q4, Q1 of this year. They are in place.

We’re starting to see some good feedback from dealers and the customers are starting to see some orders come in, and our goal – we can’t ramp it up too quick because we have to finish the order.

But we’re going to replace only the EBITDA because of the $85,000 chassis pass-through that we’ve talked about through the entire script, that is not going to be possible, but we get paid on EBITDA, shareholders like the EBITDA, and we like profitable growth.

So we’re going to – the focus is to eliminate that clip, wind that down as we’re winding up other orders. And we are seeing some good feedback, so it’s – we’re excited about it..

Okay. Thank you very much..

At this time, this will conclude today’s question-and-answer session. I’d like to turn the conference back over to Juris Pagrabs for any closing remarks..

Hey, thanks, everyone, for joining us. We look forward to seeing most of you or some of you at the ROTH Conference in a couple of weeks, and I think we have another one at the end of the month in New York City with Sidoti. So we look forward to seeing you, and have a great day. Thanks..

We want to thank everyone for attending today’s presentation. At this time, you may now disconnect your lines. Thank you..